Precious metal retreats as markets digest implications of prolonged Fed tightening cycle

Dollar resurgence creates headwinds for gold bulls despite ongoing geopolitical tensions

Trade policy uncertainties create competing forces for haven assets

The Is pi coin going to be worth anything?gold market (XAU/USD) failed to maintain momentum after approaching the psychologically significant $2,900 level during Tuesday's Asian trading session. This hesitation follows Friday's rebound from three-week lows, with fresh selling pressure emerging as traders reassess monetary policy expectations. Market participants increasingly believe the Federal Reserve may maintain restrictive interest rates for an extended period, diminishing the appeal of non-interest-bearing assets like gold. Concurrent dollar strength has added downward pressure on the precious metal's valuation.

Global trade tensions continue creating crosscurrents for gold prices. Recent tariff implementations have raised concerns about potential inflationary effects that could complicate central bank policy decisions. These measures have simultaneously sparked fears about slowing economic activity, which typically supports haven demand. Equity market weakness suggests growing risk aversion among investors, though this hasn't yet translated into sustained gold buying. Market participants appear cautious ahead of Friday's critical US employment data release, which could significantly influence Fed policy expectations.

Market Dynamics: Competing Forces Shape Gold's Price Trajectory

• 
  

• Monetary policy expectations remain the dominant driver, with traders pricing in fewer rate cuts following recent economic data and trade policy developments

• 
  

• New trade barriers implemented this week target multiple trading partners, raising concerns about supply chain disruptions and input cost inflation

• 
  

• Retaliatory measures announced by affected nations heighten prospects for escalating trade conflicts that could ultimately benefit haven assets

• 
  

• Manufacturing data showed input price pressures building even as activity slowed, creating potential stagflation concerns that historically support gold

• 
  

• Geopolitical developments continue creating uncertainty, though markets appear to be discounting these factors for now

• 
  

Technical Perspective: Critical Levels to Watch for XAU/USD

The inability to sustain gains above $2,900 suggests ongoing resistance near recent highs. While momentum indicators show some weakening, they remain in positive territory, suggesting potential for consolidation rather than sustained decline. Immediate support appears near $2,860, with more significant buying interest likely emerging near last week's lows around $2,833. A breach below this level could open the door for a test of the psychologically important $2,800 mark.

Conversely, a convincing move back above $2,900 could reignite bullish momentum, with initial resistance near $2,934. The record high near $2,956 remains the ultimate upside target for gold bulls. Market participants will likely remain cautious until clearer signals emerge from Friday's employment report, which could determine whether gold can overcome current resistance or extend its pullback.