Gold prices retreated on Tuesday during the North American session as the US dollar staged a modest recovery, driven by softer US economic data and a decrease in safe-haven demand. At the time of writing, XAU/USD was trading at $3,323, down by 0.60%.
US equity markets continued their upward momentum as investors grew optimistic about the possibility of US President Donald Trump easing tariffs on autos, car parts, and trucks, potentially softening the US stance toward China. Meanwhile, the US Dollar Index (DXY), which tracks the value of the greenback against six major currencies, rose 0.27%, climbing back above the 99.00 level after dipping to a yearly low of 97.92 on April 21, which capped gold’s recent gains.
US Treasury Secretary Scott Bessent commented on trade talks during a White House briefing, mentioning progress in negotiations with India and Japan but providing little clarity on discussions with Beijing.
Gold prices have enjoyed a 25% gain year-to-date, largely driven by uncertainty surrounding US trade policies and a less dovish Federal Reserve. However, recent US economic data suggests a softening labor market, with the Conference Board’s Consumer Confidence Index showing that households are growing increasingly pessimistic about the economic outlook.
This week, market participants are focused on upcoming US economic reports, particularly GDP data for Q1 2025, the Core Personal Consumption Expenditures (PCE) Price Index, and Nonfarm Payroll numbers.
Market Digest: Key Movers Impacting Gold Prices
Gold’s retreat came despite a significant drop in US Treasury yields. The yield on the 10-year Treasury note fell by 3.5 basis points to 4.17%, while real yields, as indicated by the US 10-year Treasury Inflation-Protected Securities (TIPS) yields, declined by 3 basis points to 1.92%.
The US Department of Labor reported a decline in JOLTS job openings, which fell to 7.192 million in March, the lowest level since September. This was below the anticipated 7.5 million and marked a decline from 7.48 million the previous month, signaling a weakening labor market.
The Conference Board’s Consumer Confidence Index also plummeted to 86.0 in April, the lowest in nearly five years, reflecting a growing sense of pessimism among US consumers. The downturn in consumer confidence adds to concerns about the potential for a global recession, as highlighted by a recent Reuters poll.
XAU/USD Technical Outlook: Bullish Trend Faces Key Support Tests
Despite the recent pullback, gold’s uptrend remains intact. Over the past five trading days, XAU/USD has consolidated within the $3,260-$3,386 range, unable to break below $3,200 or above $3,400.
The Relative Strength Index (RSI) shows that while the momentum remains bullish, it is nearing its neutral line, indicating a lack of clear direction from either buyers or sellers.
Should XAU/USD fall below $3,300, the next key support level would be the April 23 swing low of $3,260, followed by $3,200. On the upside, a rise past $3,400 could see the next resistance at $3,450, with the all-time high at $3,500 remaining the ultimate target.
