- Gold (XAU/USD) experienced a $100 drop but $3050 support held firm amidst tariff announcements and profit-taking.
- Volatility is expected to continue, with potential for whipsaw price action in the coming days.
- Upcoming US Nonfarm Payrolls report will influence Federal Reserve policies and impact Gold prices.
Gold prices fell off a cliff this morning despite a weaker US Dollar as tariffs propelled the precious metal to fresh all-time highs overnight. The accelerated selloff could in part be down to profit taking following a sharp rise to $3167/oz before the Asian session began. President Donald Trump’s tariff announcement did shake markets last night but as other havens such as the JPY and CHF have gained today, Gold has struggled. This was a possibility that i had covered in my Gold piece earlier in the week titled.
What Comes Next for Gold Prices?
Gold had an aggressive selloff breaking initial support at the 3085 handle before faltering at 3053. The bounce from near the 3050 support handle has itself been aggressive as Gold rallied to a high of 3093 at the time of writing.
The volatility is to be expected with more uncertainty gripping markets and haven demand present. I do expect gold to hold firm and potentially extend its recovery.
The lack of any clear catalyst for the selloff leads me to believe that it is largely down to profit taking and repositioning post the tariff announcement.
Tariffs Impact on Gold
These tariffs are likely to raise concerns about global economic growth and create uncertainty about how other countries might respond, which could keep supporting gold prices.
On the bright side, the announcement brought some relief to metal markets. It’s now clear that steel, aluminum, gold, and copper imports won’t be affected by these tariffs. For gold, this exemption might lead to a slowdown in gold imports into the US.
The week will end with the US Nonfarm Payrolls (NFP) report for March, coming out on Friday. This key jobs report will influence what the market expects from the Federal Reserve’s future policies. Earlier this week, the ADP Employment Change report showed the private sector added 155,000 jobs in March, well above the forecast of 105,000 and February’s 84,000.
Given all the narrative in play I still do expect bullish pressure to remain on Gold prices. The clarity needed for this to not be an issue is yet to arrive and thus I can see Gold prices rising to test recent highs in the days ahead.
Given the scenarios presented above, the week ahead looks to be a volatile one with a lot of whipsaw price action ahead.
Overall, recent developments mean that the bulls remain in charge. What we have seen of late is that when it comes to Gold, overall market sentiment seems to be the biggest driving force.
Technical Analysis - Gold (XAU/USD)
From a technical analysis standpoint, Gold prices have whipsawed today with a $100 drop.
The daily chart below was extremely bearish at one point but given a $70-odd rally to the upside the risk was muted.
Source: TradingViewDropping down to a two-hour timeframe, as you can see the support level around 3083 held firm even though price printed a low of 3053.
The two hour-candle close with a large downside wick and aggressive bounce are with a doubt a significant amount of bullish pressure.
Immediate resistance rests a 3125 and 3150 before all-time highs at 3167 come into focus.
On the support front, immediate support rests at 3100 before the 3083 and 3053 handles come into play.
Source: TradingView