Gold prices under pressure as stronger US Dollar and risk appetite weigh on safe-haven demand

Gold (XAUUSD) prices face correction amid shifting market conditions. The market mood remains cautious as investors digest global developments. Recent data from the US and comments from political leaders have added to the volatility. Gold is now reacting to economic and geopolitical signals. The rising US Dollar continues to weigh on gold's upward momentum. Concerns about a possible US recession also add uncertainty to market direction. Investors remain focused on upcoming macroeconomic data for clearer signals.

Gold reacts to mixed signals from the economy and politics

Gold prices remain under pressure due to shifting global sentiments. Optimism over easing tensions between the US and China has reduced demand for safe-haven assets. US President Trump's remarks about potential trade deals further boosted risk appetite. As a result, investors moved away from gold and shifted toward riskier assets.

At the same time, the US Dollar has strengthened. This increase came after Trump's comments and stronger market confidence. A stronger dollar usually weighs on gold prices, as it makes the metal more expensive for foreign buyers. The recent drop below key support levels increased selling in gold markets.

However, weak US economic data offers some support for gold. ADP reported lower job growth, and GDP figures showed contraction. These developments strengthen the case for Federal Reserve rate cuts. Lower interest rates weaken the Dollar and support gold. Investors now await the Nonfarm Payrolls data for further direction.

Technical analysis: Gold remains in a bullish channel despite short-term losses

The daily chart for gold clearly shows a sharp rally that began in mid-2023. A long-term ascending triangle began forming in 2018 and was completed around mid-2020. This pattern is generally bullish and suggests accumulation. Once the triangle was resolved, the price entered a sideways range, which built a base.

The breakout occurred after multiple tests of resistance. In 2023, gold formed a rounded bottom pattern near the $1,800-$1,900 level. That formed the base for a new uptrend. The price surged past previous highs and entered an ascending channel, which is marked clearly on the chart.

Inside the channel, price action remained strong and consistent. Minor corrections were followed by extensions, signaling sustained bullish momentum. The "Extension" label on the chart shows an area where buyers gained renewed strength.

Eventually, gold reached the upper boundary of the ascending channel. The chart highlights a target near the $3,400 level, which has been briefly touched. This target also coincides with strong resistance. After touching this zone, gold faced selling pressure and began to retreat slightly.

The current price hovers near $3,237, just below the recent highs. A drop below $3,265-$3,260 earlier in the session triggered some technical selling. This marked the third straight day of losses for gold.

However, the larger trend remains intact. As long as gold holds within the ascending channel, the structure favors bulls. The technical picture only turns negative if the price falls below the lower boundary of the channel or breaks below key support zones around $3,100.

Conclusion

Gold price stays under pressure but rebounds slightly from a two-week low near $3,221. Optimism over easing US-China tensions supports risk sentiment, while a stronger US Dollar weighs on gold demand. Expectations of Fed rate cuts, driven by weak US GDP and cooling inflation, limit further losses. Traders now await key US data, including Friday's Nonfarm Payrolls report, for clearer direction.

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