Gold’s rally took a pause this Thursday, with XAU/USD trading around $2,857, after US Treasury Secretary Scott Bessent stated that the Trump administration is focusing on bringing down 10-year Treasury yields rather than adjusting the Federal Reserve’s short-term interest rates. This shift in focus has led to a slight pullback in the precious metal’s price, which had been riding high on geopolitical tensions and economic uncertainty. Investors are now turning their attention to the Bank of England’s expected 25 basis point rate cut and speeches from Federal Reserve officials ahead of Friday’s Nonfarm Payrolls data release, which could further impact market sentiment.
Market Movers
Profit-taking activity has been a significant factor driving the decline in gold prices this Thursday. US President Donald Trump’s comments regarding the situation in Gaza and his planned nuclear deal with Iran have eased some of the market’s tail risks. This has encouraged investors to shift toward riskier assets, reducing demand for safe-haven investments like gold. Trump’s plan to present a peace proposal for the war in Ukraine next week also contributed to market optimism, further diminishing gold’s appeal as a safe-haven asset.
The broader commodity market is also experiencing a rally, as the Bloomberg Commodity Index surged 5.9% this year, bolstered by gains in precious metals and agricultural commodities. Despite this, gold has remained under pressure as investors adjust their portfolios amid improving global risk sentiment. Additionally, Reuters reports that gold in the Bank of England vault is trading at a discount, and the fear of potential US tariffs has led to a scramble for bullion, causing long withdrawal queues.
Technical Outlook
On the technical front, gold’s price is encountering resistance at $2,886, just above its current all-time high. If the upward momentum resumes, the next key resistance level lies near $2,905. On the downside, the first support level is at $2,834, followed by a stronger level at $2,820. In case of a deeper correction, the $2,790 level, which was the previous high on October 31, 2024, could act as a significant support zone, likely to catch any significant downward movement.
Conclusion
Despite the pullback in gold prices, the precious metal remains supported by persistent geopolitical risks and global economic uncertainties. While profit-taking and a shift in risk sentiment have weighed on gold, the underlying factors driving demand for safe-haven assets are still in play. The upcoming economic data, including Nonfarm Payrolls and Federal Reserve officials’ comments, will be crucial in determining whether gold can regain its upward momentum. For now, traders will be watching for any potential changes in market sentiment or new catalysts that could push gold either higher or lower in the coming days.