Gold prices (XAU/USD) remained relatively steady on Friday after retreating from an all-time high of $3,358 earlier in the week. Investors took the opportunity to book profits ahead of the long Easter weekend, while uncertainty surrounding U.S. President Donald Trump’s tariffs and ongoing geopolitical tensions continue to support gold, a traditional safe-haven asset.
Federal Reserve Chair Jerome Powell’s hawkish tone further impacted market sentiment. His remarks suggested that a weak economy combined with high inflation could lead to stagflation, reducing the likelihood of a Fed rate cut in June. This shift in tone could boost the U.S. Dollar and exert downward pressure on gold prices, which are denominated in USD. Powell’s comments also raise concerns that inflationary pressures may complicate the Fed’s policy goals. The Fed’s Mary Daly is expected to speak later on Friday, though trading volumes are likely to remain light due to Good Friday.
Gold Price Faces Headwinds Amid Strong Dollar and Geopolitical Tensions
Despite a dip in price, gold remains heavily supported by a weaker dollar and ongoing concerns over global economic uncertainty, according to Lukman Otunuga, senior research analyst at FXTM. The commodity also benefits from the persistent fears of a global recession, which continue to make gold a preferred investment for risk-averse traders.
Recent economic data showed that U.S. Initial Jobless Claims for the week ending April 12 dropped to 215,000, lower than the previous week’s revised 224,000. Continuing Jobless Claims for the week ending April 5 rose by 41,000 to 1.885 million. Meanwhile, U.S. Building Permits for March rose 1.6% to 1.482 million, surpassing estimates, though Housing Starts fell to 1.324 million in March from 1.494 million in February.
Money market traders, however, have priced in nearly 86 basis points (bps) of rate cuts by the end of 2025, with the first cut expected in July, according to the CME FedWatch tool.
Technical Analysis: Bullish Bias Persists but Overbought RSI Signals Caution
Gold continues to show a bullish bias on the daily chart, with the price holding above the key 100-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) has risen above 70, indicating overbought conditions. This suggests that gold could experience some consolidation or a temporary pullback in the short term.
The immediate resistance to watch is $3,355, the upper boundary of the Bollinger Band. A sustained move above this level could open the door to a test of the psychological $3,400 level.
On the downside, the low of April 18 at $3,230 serves as initial support for XAU/USD. Should this level fail to hold, the next key support lies at $3,105, the low of April 2.
Gold’s outlook remains positive, but traders should be cautious as technical indicators signal potential short-term pullbacks. The ongoing global uncertainty and Fed policy expectations will continue to drive price action in the precious metal.