Gold prices have halted a three-day streak of declines, consolidating just below the $3,000 mark as rising U.S. Treasury yields diminish the appeal of the non-yielding metal for investors. Despite optimism surrounding potential trade deals, the ongoing “trade war” between the U.S. and China continues to create unease among investors. At the moment, XAU/USD is trading at $2,980 per troy ounce, showing little change.
Gold rates decline in Dubai
In Dubai, gold rates have dropped, with 24-carat gold decreasing by AED5 to AED359.75. Similarly, 22-carat gold lost AED3.25, reaching AED334.50. Additionally, 21-carat gold experienced a decrease of AED3, settling at AED320.75, while 18-carat gold edged down to AED275.00.
Price action suggests resistance at $3,000
Gold prices trends have stabilized near the $2,980 level; however, the price action indicates that traders are struggling to find acceptance beyond the $3,000 mark. A failure to close above this threshold could trigger a test of the 50-day Simple Moving Average (SMA) at $2,947. A drop below this level may push XAU/USD towards the $2,900 level.
Read more: Dubai gold prices drop AED5, global rates slip below $3,000 amid tariff turmoil
Market sentiment turns negative
Sentiment in the market has shifted to negative as Wall Street recorded significant losses. Monday’s rally proved short-lived as the bear market reasserted itself, with the Volatility Index (VIX) climbing once more, reflecting ongoing uncertainty among market participants regarding the economic outlook.
The announcement from the White House regarding the retention of 104 percent tariffs on China sparked a spike in the VIX. As a result, the S&P 500, Dow Jones, and Nasdaq reversed their earlier gains and fell sharply on Tuesday.
Gold prices under pressure from rising yields
Meanwhile, gold prices have declined as U.S. Treasury yields surged across the entire yield curve. The swaps market has priced in a 40 percent chance of a Federal Reserve rate cut in May. Nevertheless, elevated U.S. yields continue to exert pressure on XAU/USD.
In related news, Federal Reserve officials have made headlines. San Francisco Fed President Mary Daly noted that while CEOs feel uncertain, there is an underlying optimism about growth. She expressed concern about a potential rise in inflation due to tariffs. Earlier, Chicago Fed President Austan Goolsbee remarked that tariffs are significantly higher than anticipated, adding to fears that high inflation may resurface.
Traders are closely monitoring the forthcoming release of the Fed’s last meeting minutes, which will be overshadowed by the latest inflation figures from both consumer and producer perspectives.
