XAUUSD ANALYSIS OVER H1 CHART.
Gold Slips Below $2,930 Amid Market Correction, But Upside Potential Remains
Gold Retreats Amid Profit-Taking, but the Bullish Trend Remains Intact
The gold (XAU/USD) price dropped by 0.31% on Tuesday as traders started to exit their long positions after bullion failed to hold above the important $2,930 level.
Despite a recent technical correction, the fears of a global trade war, spurred by US trade tariffs, will likely keep investors on edge. Thus, it's too early to assume that a bullish trend in XAU/USD, which started in late December, may be over.
"Just seeing some profit-taking from the shorter-term futures traders the market's becoming a bit overextended and just due for some downside corrective pressure and some chart consolidation"
On Monday, US President Donald Trump substantially raised tariffs on steel and aluminium imports towards 25% 'without exceptions or exemptions'. Economists fear the decision might trigger a global trade war and increase inflation. Gold tends to perform well as a protective asset when geopolitical and economic uncertainty is rising.
At the same time, US interest rates remain relatively high and continue to exert some bearish pressure on the bullion. Indeed, in his first appearance before Congress this year, Federal Reserve (Fed) Chair Jerome Powell said the central bank isn't rushing to cut interest rates given a 'strong overall' economy and inflation that remains above its 2% target. A recent Reuters poll showed that the Fed would wait until the next quarter before cutting rates again. However, the Fed may postpone the decision even further if trade tariffs heighten US inflation.
Earlier today, XAU/USD fell during the Asian and early European trading sessions. Investors await US inflation data due at 1:30 p.m. UTC for fresh clues on the interest rate outlook.
"Higher-than-expected inflation readings could extend the rate pause by the Fed, which could cause gold's performance to moderate in the short term", said Ryan McIntyre, senior portfolio manager at Sprott Asset Management.
"Spot gold may retest support at $2,879 per ounce, a break below which could open the way towards $2,847 to $2,867 range"
Gold Retreats Amid Profit-Taking, but the Bullish Trend Remains Intact
The gold (XAU/USD) price dropped by 0.31% on Tuesday as traders started to exit their long positions after bullion failed to hold above the important $2,930 level.
Despite a recent technical correction, the fears of a global trade war, spurred by US trade tariffs, will likely keep investors on edge. Thus, it's too early to assume that a bullish trend in XAU/USD, which started in late December, may be over.
"Just seeing some profit-taking from the shorter-term futures traders the market's becoming a bit overextended and just due for some downside corrective pressure and some chart consolidation"
On Monday, US President Donald Trump substantially raised tariffs on steel and aluminium imports towards 25% 'without exceptions or exemptions'. Economists fear the decision might trigger a global trade war and increase inflation. Gold tends to perform well as a protective asset when geopolitical and economic uncertainty is rising.
At the same time, US interest rates remain relatively high and continue to exert some bearish pressure on the bullion. Indeed, in his first appearance before Congress this year, Federal Reserve (Fed) Chair Jerome Powell said the central bank isn't rushing to cut interest rates given a 'strong overall' economy and inflation that remains above its 2% target. A recent Reuters poll showed that the Fed would wait until the next quarter before cutting rates again. However, the Fed may postpone the decision even further if trade tariffs heighten US inflation.
Earlier today, XAU/USD fell during the Asian and early European trading sessions. Investors await US inflation data due at 1:30 p.m. UTC for fresh clues on the interest rate outlook.
"Higher-than-expected inflation readings could extend the rate pause by the Fed, which could cause gold's performance to moderate in the short term", said Ryan McIntyre, senior portfolio manager at Sprott Asset Management.
"Spot gold may retest support at $2,879 per ounce, a break below which could open the way towards $2,847 to $2,867 range"
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