Gold price holds steady above $3,000 amid trade jitters, Fed rate cut bets

Gold price (XAU/USD) maintains its bid tone above the $3,000 psychological mark through the first half of the European session on Tuesday as worries about an all-out global trade war continue to underpin demand for traditional safe-haven assets. Apart from this, bets that a tariffs-driven US economic slowdown might force the Federal Reserve (Fed) to cut interest rates more aggressively this year turn out to be another factor that benefits the non-yielding yellow metal.

Meanwhile, dovish Fed expectations fail to assist the US Dollar (USD) to build on its recent recovery from a multi-month low, which, in turn, is seen lending additional support to the Gold price. However, a positive turnaround in the global risk sentiment seems to act as a headwind for the XAU/USD pair. Traders also seem reluctant to place aggressive bets ahead of the release of FOMC meeting minutes on Wednesday and the US consumer inflation figures on Thursday.

Daily Digest Market Movers: Gold price is underpinned by a combination of factors; bulls seem non-committed

• Investors remain worried that US President Donald Trump’s latest trade tariffs would trigger an all-out global trade war and negatively impact the world economy. This, along with the emergence of fresh US Dollar selling, helps revive demand for the safe-haven precious metal during the Asian session on Tuesday.
• Market participants now seem convinced that the Federal Reserve will resume its rate-cutting cycle soon amid worries about the potential economic fallout from Trump's aggressive trade policies. Moreover, Trump called for the Fed to cut interest rates as soon as possible, arguing that the US economy was in a strong position.
• Fed Governor Adriana Kugler said on Monday that the US central bank's focus should be on keeping inflation in check and noted that short-term inflation expectations have risen but remain well-anchored in the longer term. She further added that Fed policymakers are still committed to the 2% inflation target.
• Separately, Chicago Fed President Austan Goolsbee said that a global trade war eruption may lead to a consumer behavior shift. If tariffs are as large as announced, with counter-tariffs, they could lead to supply disruptions, and high inflation, Goolsbee added further, though it does little to dent Fed rate cut expectations.
• In fact, the current market pricing indicated the possibility that the US central bank could again lower borrowing costs at the June policy meeting and deliver at least four rate cuts by the year-end. This fails to assist the USD in building on its recovery gains registered over the past two days and benefits the non-yielding Gold price.
• Traders will closely monitor minutes from the Fed's latest policy meeting, scheduled for release on Wednesday. Apart from this, the US Consumer Price Index on Thursday and the Producer Price Index on Friday should provide cues about the future rate-cut path. This, in turn, will influence the USD and the XAU/USD pair.

Gold price bulls have the upper hand while above multi-week low, around $2,957-2,956 touched on Monday

From a technical perspective, oscillators on the daily chart have just started gaining negative traction. However, the overnight bullish resilience near the 61.8% Fibonacci retracement level of the February-April rally and the subsequent move-up warrants caution for bearish traders. The mixed setup suggests that the Gold price might continue to find some support near Monday’s swing low, around the $2,957-2,956 area. This is closely followed by the 50-day Simple Moving Average (SMA), currently pegged near the $2,948-2,947 region. A convincing break below the latter will set the stage for an extension of the recent sharp pullback from the all-time peak touched last Thursday.

On the flip side, any further move up is more likely to confront stiff resistance near the $3,020 horizontal zone, above which the Gold price could climb to the $3,055-3,056 horizontal barrier. Some follow-through buying will be seen as a fresh trigger for bullish traders and allow the XAU/USD to aim towards reclaiming the $3,100 mark, with some intermediate hurdle near the $3,075-3.080 region.