Gold prices edged lower on Tuesday, extending their pullback from the previous day’s all-time high, with XAU/USD dropping to the $2,929 region amid profit-taking. Despite the retreat, losses appear limited as economic concerns surrounding Trump’s trade policies continue to bolster the safe-haven appeal of gold. The market remains cautious over potential tariffs on Canadian and Mexican imports, as Trump reaffirmed on Monday that they are “on time and on schedule,” fueling fears of further global trade disruptions.
Meanwhile, expectations of Federal Reserve (Fed) rate cuts this year have kept the US Dollar (USD) under pressure, preventing gold from experiencing a sharp downturn. Although Chicago Fed President Austan Goolsbee emphasized a “wait-and-see” approach before further rate cuts, market sentiment remains tilted towards at least two quarter-point reductions. The latest World Gold Council (WGC) data also revealed that physically backed gold ETFs recorded their largest weekly inflow since March 2022, highlighting sustained investor demand.
Looking ahead, traders are focused on key US economic data, including the Consumer Confidence Index and the Richmond Manufacturing Index, as well as speeches from influential FOMC members. The main event, however, will be Friday’s release of the US Personal Consumption Expenditure (PCE) Price Index, which could provide further clarity on the Fed’s rate-cut path.
Despite the current range-bound trading, gold remains in a bullish consolidation phase, with the Relative Strength Index (RSI) near 70, suggesting overbought conditions. A deeper pullback could find support around $2,920-$2,915, followed by $2,900 and $2,880. A decisive break below $2,880 could push XAU/USD towards $2,855-$2,834, with a further downside extension possibly testing the $2,800 psychological level. However, dip-buying interest near key support zones indicates that bullish momentum remains intact, keeping the path of least resistance tilted to the upside.
