Gold price rose to new record highs on Thursday feeding off investor worries as trade tariffs stay in focus ahead of the Good Friday-Easter weekend. The commodity rose to $3,357 per ounce at the spot market in the European session, taking its weekly gains to 4.6% in addition, gold price has gained 26.7% year-to-date.
The commodity’s gains have been tamed by Federal Reserve Chairman Jerome Powell’s “wait-and-see” comments on Wednesday. Analysts had earlier sounded confident that the central bank was likely to announce an interest rate cut May, but Powell was cautiously hawkish, stating that the trade tariff war could adversely impact the US economy, but emphasizing the need to keep inflation rates low.
Yields on US Treasury bonds have been subdued below 4.35% for the better part of the last week, reducing the pressure on non-yielding gold. Also, the US dollar has lost its lustre on concerns that the US economy could soon enter a recession if the trade tariff war continues. The DXY index is still below the 100 mark, the fifth successive day it has been in that territory. A continuation of that trend will keep gold price on the ascending trajectory in the near-term.
On the downside, however, US President Donald Trump met Japanese trade representatives on Wednesday, describing the discussions as a big step. More talks could be in the pipeline in the new week, and that could result in reduced safe haven demand for gold.
Gold Price Forecast
The momentum on gold price calls for further downside below the pivot mark at $3,330. The yellow metal will likely pause its downtrend at $3,300 at the first support. A continued control by the sellers will break below that level and will likely open the way to test $3,281.
Conversely, breaking above $3,330 will shift the momentum to the upside. XAUUSD will likely encounter initial resistance at $3,348. Breaking above that barrier will invalidate the downside narrative. Furthermore, that momentum could result in stronger gains to test $3,370.
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