Hawkish comments from Fed Chair Jerome Powell led to a sell-off in the price of gold.
XAUUSD – Daily Chart
The price of XAUUSD has tumbled by almost $150 in two days as traders unwind long positions. That will now be the resistance barrier with further support above $2,800.
Federal Reserve Chair Powell spoke about the economy at a conference in Virginia and said that monetary policy is well-positioned to wait for further clarity. Powell said tariffs were “likely to raise inflation in coming quarters, with more persistent effects possible”.
He added that measures of long-term inflation are “well anchored” and that the central bank’s obligation is to ensure that a “one-time increase in price levels doesn’t become an ongoing inflation problem”.
The Fed Chair also added that the economic outlook is highly uncertain and that despite the fact that the economy is in a good place, downside risks have risen. Money market traders had priced in over 1% of Fed easing by 2025 due to the economic outlook. However, markets are now pulling back on the gold surge as doubts emerge.
Despite the recent selling, Deutsche Bank has raised its average gold price forecast in recent days. The investment bank said that 2025 and 2026 should see bullion at $3,139 and $3,700 per ounce respectively, driven by economic and geopolitical developments around the world. The bank had previously forecast an average price of $2,725 for this year, and $2,900 for 2026.
Other investment banks with plus $3,000 price targets for 2025 include BofA, Goldman, and HSBC. The lowest target is $2,763, shared by Morgan Stanley and Australia’s ANZ.
China’s central bank added gold to its reserves in March for the fifth straight month, according to official data from the People’s Bank of China (PBOC) last week.
Central banks have been keen buyers of physical metals and that could continue as the tariff environment adds uncertainty to the world economy.
