Gold Prices Retreat as Dollar Strengthens and Trade Tensions Loom

Gold prices have entered a correction phase, experiencing three consecutive days of decline driven by a strengthening US dollar and potential trade policy shifts. The precious metal has pulled back from its recent record high, with April gold futures currently trading at $3,015.60, marking a $5.80 decline.

Market Dynamics and Price Movement

After reaching an all-time intraday high of $3,065.20 last Thursday, gold has been experiencing sustained selling pressure. The futures contract opened at $3,027.60 and saw a peak of $3,038.40 before retreating, reflecting the current market uncertainty.

The US dollar index has been a key factor in gold's price movement, showing consistent gains since March 19. The index has climbed from 102.94 to approximately 104, appreciating by approximately 1% over the last four trading days.

Geopolitical Context and Economic Outlook

Analysts at Saxo Bank note that while gold found support around the $3,000 level, the short-term outlook suggests a period of consolidation. Investors are closely watching potential tariff announcements expected on April 2, which could significantly impact market sentiment.

The current gold price correction comes after an impressive rally. From March 11 to its peak, gold surged by over $170 per ounce. The recent pullback represents approximately 29% retracement of those gains.

Geopolitical tensions continue to provide some underlying support for gold, with ongoing conflicts in the Middle East and Ukraine maintaining safe-haven demand. However, potential tariff revisions by the Trump administration could escalate trade tensions with major partners like Mexico, Canada, and China.

Analysts warn that additional tariffs might contract global economic growth. Simultaneously, strength in major US stock indexes—up roughly 1%—could further pressure gold prices lower.

Technical Outlook

From a technical perspective, the first major support level for gold futures sits around $2,970, corresponding to previous price highs before the February 28 drop to $2,803.

While gold continues to navigate a complex economic landscape, investors remain watchful of upcoming trade policy announcements and the dollar's continued strength. The precious metal's ability to maintain support around the $3,000 mark will be crucial in determining its near-term trajectory.

Wishing you, as always good trading,