Despite mixed signals, gold saw some buyers emerge on Wednesday, partially recovering from the significant losses of the previous day.
However, strong bullish momentum remains absent, according to experts.
“The uncertainty surrounding US President Donald Trump’s trade tariffs, US fiscal concerns, and geopolitical risks keep a lid on the market optimism, which, in turn, revive demand for the safe-haven bullion,” Haresh Menghani, editor at FXStreet, said in a report.
Bets on further Federal Reserve rate cuts in 2025 provide a boost to gold, which does not generate income, Menghani added.
At the time of writing, the most-active gold contract on COMEX was at $3,343.21 per ounce, up 0.4% from the previous close.
Among other precious metals, silver prices on COMEX were up 0.5% at $33.472 per ounce.
Dollar weighs on gold
Following better-than-expected US economic data released on Tuesday, the US Dollar (USD) has gained positive momentum for the second consecutive day.
Gold fell sharply over the last couple of sessions and dropped below $3,300 in early European trade.
It has now given back most of its gains from Friday, when it rallied sharply on news that Trump was hitting the European Union with a fresh 50% tariff.
Gold’s pullback earlier this week came as the Trump administration postponed those tariffs for five weeks.
Over the past two weeks, the dollar Index experienced a consistent decline.
However, trading over the past couple of days saw a reversal, with the index finding support and making gains against various currencies in early trade.
A stronger dollar makes commodities priced in the greenback more expensive for overseas buyers, thereby limiting demand.
David Morrison, senior market analyst at Trade Nation, said:
Despite this, overall dollar weakness along with market uncertainty has kept gold on traders’ radars as a preferred defensive asset.
Economic data
April saw a notable 6.3% drop in US Durable Goods Orders, according to a Tuesday report from the Census Bureau.
This contrasts sharply with the prior month’s revised 7.6% growth (originally reported as 9.2%) but was less severe than the anticipated 7.9% decrease.
Excluding transportation, orders saw a modest increase of 0.2% in April.
Moreover, following a sustained decrease since December 2024, the Conference Board’s US Consumer Confidence Index experienced a significant rebound in May, reaching 98.
This 12.3-point surge from April’s 85.7 marks the largest monthly gain in four years.
The increase reflects a more positive economic and labor market outlook, supported by the US-China trade truce, which strengthened the dollar and weighed on gold and silver.
Meanwhile, the market anticipates at least two 25 basis point interest rate reductions by the Federal Reserve in 2025, as reflected in current trader pricing.
“Traders now look forward to the release of FOMC meeting minutes for cues about the future rate-cut path, which will play a key role in influencing the USD and providing some meaningful impetus to the non-yielding yellow metal,” Menghani said.
Technical outlook
“Looking at the daily chart, the 50-day moving average has acted as support since the beginning of this year,” Morrison said.
The 50-day is currently around $3,250, so it should be worth keeping this area in mind if gold were to pull back further.
Bearish traders found a key trigger in the overnight breakdown below a short-term ascending trend line.
Further selling below the 200-period simple moving average (SMA) and confirmation under $3,300 would strengthen the negative outlook, according to FXStreet.
Following any decline, buyers might be drawn in, with solid support expected around the $3,250-$3,245 horizontal range.
On the other hand, following momentum that extended beyond today’s Asian session high, near $3,315-3,316, the price now appears to be facing resistance around the $3,340-3,345 level.
Menghani said:
The latter coincides with the ascending trend-line breakpoint, above which a fresh bout of a short-covering could lift the Gold price to over a two-week high, around the $3,365-3,366 zone touched last Friday.
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