Gold Price Declines from Record High as US Dollar Strengthens.

Gold Price Retreats from Record Highs Amid Stronger US Dollar – Key Market Drivers

Gold prices (XAU/USD) faced renewed selling pressure during the Asian session on Friday, pulling back from the all-time peak reached the previous day. However, downside momentum remains limited as several factors continue to support the precious metal. Meanwhile, the US Dollar (USD) has strengthened for the third consecutive day, trading near its weekly high, which is adding pressure on gold prices. Additionally, investors are locking in profits after gold’s recent historic surge ahead of the weekend.

Why Is Gold Price Declining?

Stronger US Dollar Weighs on Gold

The US Dollar is seeing sustained demand, extending its recovery from multi-month lows. This renewed strength in the USD is a key driver behind gold’s retreat, as a stronger dollar makes the non-yielding metal less attractive to investors.

Profit-Taking Ahead of the Weekend

Following a record-breaking rally, gold traders are opting to secure gains, contributing to the pullback in prices. The profit-booking trend is typical after a sharp surge in asset values, especially before a weekend when market conditions may shift.

Factors That Could Support Gold Prices

Federal Reserve’s Rate Cut Expectations

Despite the USD’s strength, market expectations for the Federal Reserve (Fed) to resume rate cuts could limit further downside in gold prices. The Fed has signaled at least two 25 basis point rate cuts by the end of the year, with investors anticipating reductions in June, July, and October. Lower interest rates generally support gold as they reduce the opportunity cost of holding non-yielding assets.

Geopolitical Uncertainty Boosts Safe-Haven Demand

Several global risks are keeping investors cautious and sustaining gold’s appeal as a safe-haven asset:

• US Trade Policy Uncertainty: Investors remain concerned about US President Donald Trump’s aggressive trade policies, including newly announced reciprocal tariffs set to take effect on April 2, alongside existing 25% duties on steel and aluminum.
• Russia-Ukraine Conflict: The conflict in Eastern Europe continues to escalate, with both countries intensifying aerial attacks. Ukraine recently struck Russia’s Engels airbase, while Russia launched a wave of drone attacks in response. Meanwhile, US and Russian officials are set to hold peace talks in Saudi Arabia next week.
• Middle East Tensions: Israel resumed heavy airstrikes across Gaza, breaking a ceasefire that had been in place since late January. In retaliation, Hamas fired rockets at Israel, escalating geopolitical uncertainty.

What’s Next for Gold Prices?

While the US Dollar’s rebound is pressuring gold, expectations for Federal Reserve rate cuts and rising geopolitical tensions are likely to act as tailwinds for the yellow metal. In the absence of significant US macroeconomic releases, traders will keep a close eye on central bank commentary and global developments to gauge the next potential move in gold prices.

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