Gold price remains depressed amid positive risk tone; $3,000 holds the key

Gold price attracts some sellers for the third successive day on Monday.

A positive risk tone and a modest USD uptick undermine the commodity.

Fed rate cut bets and geopolitical risks could support the XAU/USD pair. 

Gold price (XAU/USD) struggles to capitalize on Friday's modest bounce from levels just below the $3,000 psychological mark and kicks off the new week on a weaker note. The global risk sentiment gets a minor lift in reaction to reports that US President Donald Trump's reciprocal tariffs would be narrower and less strict than initially feared. This helps ease concerns about their impact on the global economy, which boosts investors' confidence and weighs on the safe-haven precious metal for the third successive day. 

Meanwhile, the US Dollar (USD) preserves last week's modest recovery gains from a multi-month trough and turns out to be another factor undermining demand for the Gold price. However, expectations that a tariff-driven slowdown in the US economic activity could force the Federal Reserve (Fed) to resume its rate-cutting cycle soon hold back the USD bulls from placing fresh bets. This, along with geopolitical risks, should act as a tailwind for the non-yielding yellow metal and help limit any meaningful corrective slide. 

Daily Digest Market Movers: Gold price bulls turn cautious amid upbeat market mood, recent USD recovery

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• Reports over the weekend indicated that US President Donald Trump is planning a narrower, more targeted agenda for the so-called reciprocal tariffs set to take effect on April 2. This, in turn, boosts investors' appetite for riskier assets and undermines the safe-haven Gold price at the start of a new week. 

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• Delegations from the US have been holding talks with Ukrainian officials as part of peace negotiations and will meet Russian officials on Monday for further talks. Trump and Russian President Vladimir Putin earlier this month agreed on a 30-day pause on Russian strikes on Ukrainian energy facilities.

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• The US Dollar held steady near a one-and-half-week high touched on Friday in the wake of the Federal Reserve's less dovish outlook, maintaining its forecast to deliver two 25 basis points rate cuts by the end of this year. This turns out to be another factor weighing on the non-yielding yellow metal. 

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• Meanwhile, Fed Chair Jerome Powell said last week that tariffs are likely to dampen economic growth. Moreover, traders still see the US central bank lowering borrowing costs at the June, July, and October monetary policy meetings, which keeps a lid on the USD and could support the XAU/USD pair. 

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• Israel continues with its heavy strikes in Gaza and bombs the largest hospital in the southern region, killing Hamas leader Ismail Barhoum. Meanwhile, Iran-backed Houthis in Yemen fired a ballistic missile at Israel on Sunday, though it was successfully intercepted by Israel's air defense. 

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• Furthermore, the US military conducted fresh airstrikes on Yemen’s northern province of Saada. Moreover, Houthis claimed to have launched fresh attacks on an aircraft carrier in the Red Sea and the Ben Gurion airport in central Israel, raising the risk of a further escalation of Middle East tensions. 

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• Traders on Monday will look to the release of flash global PMIs, which would provide fresh insight into the global economic health and provide some impetus to the commodity. The focus, however, will remain on the US Personal Consumption and Expenditure (PCE) Price Index on Friday.

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Gold price needs to find acceptance below the $3,000 mark to support prospects for any meaningful corrective fall

From a technical perspective, any subsequent slide might continue to attract some buyers near the $3,000 mark. The said handle should act as a key pivotal point, which if broken decisively might prompt some technical selling and drag the Gold price to the $2,982-2,978 region. The corrective fall could extend further towards the $2,956-2,954 resistance breakpoint, now turned support. 

On the flip side, the all-time peak, around the $3,057-3,058 zone touched last week, could act as an immediate hurdle. Given that the daily Relative Strength Index (RSI) has trended lower from the overbought territory, some follow-through buying will be seen as a fresh trigger for bulls. This, in turn, will set the stage for an extension of the recent well-established uptrend witnessed over the past three months or so.