Gold price attracts some sellers on profit-taking

By Admin

18 Apr, 2025

The gold market saw a slight dip in the early European session on Good Friday as traders chose to lock in profits after XAU/USD recently touched an all-time high of $3,358. The price drifted lower as trading volumes remained subdued due to the long Easter weekend. Despite this pullback, the precious metal remains fundamentally supported by a complex mix of global uncertainties and economic data.

Tariff uncertainty and recession fears fuel safe-haven demand

Gold, traditionally viewed as a safe-haven asset, continues to benefit from lingering concerns surrounding global recession risks and uncertainty over potential tariffs under US President Donald Trump's administration. Geopolitical tensions are further amplifying the appeal of gold, offering a cushion to prices even as some short-term profit-taking emerges.

“Gold remains heavily supported by a broadly weaker dollar, uncertainty around tariff announcements, and fears about a global recession,” said Lukman Otunuga, a senior research analyst at FXTM.

Fed signals mixed cues: Hawkish Powell, Daly's speech awaited

Adding to market volatility, Federal Reserve Chair Jerome Powell recently adopted a hawkish tone, expressing concerns over the possibility of stagflation—a scenario marked by slow economic growth and high inflation. This stance diminishes the odds of a rate cut in June, which could strengthen the US dollar and exert downward pressure on gold prices.

Looking ahead, investors are closely watching for a speech from Fed’s Mary Daly scheduled later on Friday, hoping for additional insights into the central bank’s monetary policy outlook.

US economic indicators add to the mixed sentiment

Recent US economic data has presented a mixed picture. Initial Jobless Claims fell to 215,000, below both estimates and the previous week’s revised figure of 224,000, reflecting a still-strong labor market. However, Continuing Claims rose by 41,000 to reach 1.885 million, suggesting some lingering slack in employment.

On the housing front, Building Permits in March jumped by 1.6% to 1.482 million—above expectations. However, Housing Starts fell sharply to 1.324 million from February’s revised 1.494 million, highlighting softness in new construction activity.

According to the CME FedWatch tool, money market traders still anticipate nearly 86 basis points of rate cuts by the end of 2025, with the first cut expected as early as July.

Technical setup: Bullish bias intact but caution warranted

Despite the recent dip, gold maintains its bullish tone on the daily chart, supported by its position above the 100-day Exponential Moving Average. However, the 14-day Relative Strength Index (RSI) has risen above the 70.00 mark—indicating overbought conditions and signaling that a short-term correction or consolidation may be near.

From a technical perspective, immediate resistance is seen at $3,355, which marks the upper boundary of the Bollinger Band. A sustained move above this level could open the door toward the next psychological barrier at $3,400. On the downside, key support levels include $3,230—the low of April 18—and $3,105, which corresponds to the low of April 2.

Conclusion

While profit-taking has momentarily pressured gold prices, the broader macroeconomic backdrop—ranging from Fed policy uncertainty to geopolitical tensions and weak global growth forecasts—continues to support the metal’s long-term bullish trajectory. Traders are advised to remain cautious due to technical overbought signals but should also keep an eye on upcoming Fed commentary and global economic developments that could drive further price action.