Gold prices (XAU/USD) experienced some downward movement during the first half of Thursday’s European session but managed to hold above the key $2,900 level. The recent concessions made by the US in trade tariffs against Canada and Mexico have boosted investor appetite for riskier assets, shifting flows away from safe-haven assets like gold. However, the intraday dip in gold prices lacks any major fundamental catalyst, and the decline is expected to remain limited.
Tariff Concerns and Economic Slowdown Support Gold
Despite the intraday pullback, investors remain cautious about the ongoing trade tensions initiated by US President Donald Trump’s tariff measures, which have escalated concerns over a potential global trade war. These fears continue to support the demand for gold as a safe-haven asset. Additionally, the expectation that Trump’s policies could slow US economic growth and prompt the Federal Reserve (Fed) to cut interest rates multiple times in 2025 is limiting gold’s downside potential, making it difficult for bearish traders to make significant progress.
Market Moves: US Tariffs and Economic Data Drive Market Sentiment
US President Donald Trump’s new 25% tariffs on imports from Canada and Mexico, which took effect earlier this week, along with the doubling of duties on Chinese goods, have added to global trade concerns. In response, Canada announced retaliatory tariffs on more than $100 billion worth of US products, and China imposed tariffs of up to 15% on US agricultural exports.
During his first address to Congress, Trump warned that further tariffs, including “reciprocal tariffs,” would be introduced in April, heightening fears of a full-scale trade war. The possibility that these tariff measures could slow US economic growth and lead the Federal Reserve to cut interest rates in the near future has fueled speculation, particularly after the disappointing ADP report showed US private sector employment grew by just 77,000 jobs in February, far below the expected 140,000.
Despite some positive economic activity in the US service sector, the news failed to inspire confidence in the US Dollar. The USD Index (DXY) dropped to its lowest level since December 2024, providing further support for gold during Thursday’s Asian session. Additionally, the White House announced a one-month delay for US automakers to comply with the tariffs under the US–Mexico–Canada Agreement, which further boosted investor risk appetite, keeping bullish sentiment around riskier assets.
Technical Outlook: Limited Slide and Bullish Potential
Gold’s technical outlook shows that any further decline may be seen as a buying opportunity, with support likely to hold near the $2,884-$2,883 region. The price could experience upward momentum if it breaks above the immediate resistance at $2,934, potentially targeting the all-time high of $2,956 reached in February. Positive oscillators on the daily chart suggest that any follow-through buying could extend the uptrend, which has been ongoing for several months.
However, the lack of sustained buying momentum calls for caution before traders position for further gains. If selling pressure intensifies, gold prices could face deeper losses, with the next support levels at $2,884-$2,883, followed by the $2,860-$2,858 range.
Conclusion
Gold prices remain resilient above the $2,900 mark, supported by ongoing concerns over trade tensions and potential economic slowdown. While market sentiment has improved with some concessions in US tariffs, the fundamental drivers supporting gold as a safe-haven asset are still in play. Traders are watching for any significant economic data, particularly Friday’s Nonfarm Payrolls report, to gauge the future direction of gold. Any further decline in prices may present buying opportunities, with key support levels holding strong for the time being.