Daily Price Outlook
During the European trading session on Wednesday, the price of gold (XAU/USD) dropped more than 1%, trading near $3,274. The decline marks a second consecutive day of profit-taking amid improving global trade sentiment and caution ahead of crucial US economic data releases.
However, the recent pullback in gold prices is largely driven by rising optimism surrounding global trade. US President Donald Trump signed an executive order easing tariffs on car parts, signaling positive progress in trade negotiations, according to Bloomberg.
The move has sparked hopes that further de-escalation in trade tensions could be on the horizon, reducing demand for traditional safe-haven assets like gold.
Gold's Bullish Momentum Eases Ahead of Key US Economic Data and Fed Rate Outlook
Looking ahead, traders are now focusing on the upcoming release of the US Gross Domestic Product (GDP) report for Q1, which is scheduled for 12:30 GMT. Economists expect a slowdown in economic growth, with forecasts suggesting just a 0.4% annualized increase.
This is much lower than the 2.4% growth seen in Q4 2024. The GDP data will be important in shaping the Federal Reserve’s next move on interest rates.
Alongside the GDP report, the March Personal Consumption Expenditures (PCE) Price Index is also due. This is the Fed’s preferred measure of inflation.
The Core PCE, which excludes food and energy, is expected to drop to 0.1% from 0.4%, and the overall headline PCE is expected to come in at 0%, down from 0.3%.
If these inflation numbers show a cooling trend, it could increase hopes that the Fed may take a softer approach at its May 7 policy meeting.
At the same time, former President Trump has again criticized Fed Chair Jerome Powell, claiming he understands interest rates better than him. This political tension adds more uncertainty to what the Fed might do next.
Gold’s Long-Term Appeal Remains Supported Despite Short-Term Pullback
Despite the recent decline, long-term demand for gold remains strong. The World Gold Council reports that global investors added around 227 tons of gold to ETFs in Q1, marking the largest inflow since 2022 and driving a 19% rally.
However, with trade tensions easing and US economic data coming into focus, short-term sentiment has shifted to a more cautious outlook.
In India, one of the world's largest gold consumers, jewelry sales dropped in March, and they are expected to decline by up to 11% through the fiscal year ending in March 2026, according to Bloomberg. This adds additional pressure on global physical gold demand.
While gold prices may face short-term pressure due to weak jewelry demand in India and cautious sentiment, strong ETF inflows and long-term demand may support a potential rebound later.
GOLD (XAU/USD) – Technical Analysis
Gold is consolidating just above an ascending trendline support drawn from the April 19 low, while capped below a descending channel top from the $3,410 swing high. The price is coiling inside a symmetrical triangle, suggesting a breakout is likely.
Price is currently below the 50-period EMA ($3,313.50), which is acting as dynamic resistance, while support remains intact near $3,306.94 and the broader $3,273.00 zone.
Recent candles show multiple spinning tops and small-bodied dojis, reflecting indecision at a key technical junction. The absence of momentum suggests traders are awaiting a fundamental catalyst.
However, price action continues to print higher lows, showing underlying bullish intent. A close above $3,313.50 could trigger a bullish continuation toward $3,352.47, and potentially $3,379.07.
The Relative Strength Index (RSI) is hovering around 45.68, below the midpoint, and diverging slightly from price—a potential sign of fading downside pressure.
No bearish engulfing or three black crows are visible on this timeframe, but the failure to print a clean bullish engulfing or hammer near support also implies hesitancy among buyers.
If gold fails to hold above $3,306.94, it may retest the ascending trendline near $3,273.00. Below that, key horizontal support rests at $3,246.38 and then $3,212.28.
Overall, a break above the triangle and reclaim of the 50 EMA could shift short-term sentiment back to bullish.
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