Gold prices experienced a sharp drop at the start of Wednesday’s Asian session, plunging over 1% to trade around $3,333 per ounce. This decline was triggered by US President Donald Trump’s comments that he has no intention of firing Federal Reserve (Fed) Chair Jerome Powell, which eased market concerns about further Fed leadership changes.
Trump clarified that he would like to see Powell be more “active” in terms of lowering interest rates, but reiterated that he had no plans to remove him from office. This reassured investors who had been nervous about the uncertainty surrounding the Fed’s direction under Trump’s influence.
In addition, remarks by US Treasury Secretary Scott Bessent about a potential de-escalation of trade tensions with China helped improve market sentiment, which contributed to the downward pressure on gold prices. Following these updates, gold retreated by $50, falling from $3,420 to $3,370.
Despite these recent drops, gold continues to attract safe-haven demand amid ongoing uncertainty surrounding US trade policies and President Trump’s unpredictable stance toward the Fed. Year-to-date, gold has surged nearly 29%, bolstered by geopolitical tensions and market volatility.
Federal Reserve Chair Jerome Powell’s recent comments about the Fed remaining data-dependent, while acknowledging the risk of stagflation, have also fueled investor demand for gold. Investors are increasingly flocking to gold-backed exchange-traded funds (ETFs), with the World Gold Council reporting strong inflows in March and Q1 2025, totaling $21 billion.
On a technical level, gold prices are consolidating after retreating from the $3,500 mark. If the uptrend is to continue, buyers will need to push prices above $3,450 to test the all-time high. However, with the Relative Strength Index (RSI) showing overbought conditions, a pullback is possible. A close below $3,400 could lead to further declines, targeting support levels at $3,350 and $3,300.
Market moves also saw the US 10-year Treasury yield drop by two basis points to 4.395%, while real yields on Treasury Inflation-Protected Securities also edged lower. Traders are pricing in 91 basis points of Fed rate cuts by the end of 2025, with the first expected in July. This week’s US economic docket is packed with important data, including Fed speeches, S&P Global Flash PMIs, Durable Goods Orders, and consumer sentiment updates.
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