Image Credit: CNBC

Gold (XAU/USD) continues to experience a modest pullback from its all-time high reached earlier this Thursday, but it remains above the $3,100 level in the early European session. Traders are taking profits amid slightly overbought conditions, but concerns over the potential economic impact of U.S. President Donald Trump's sweeping reciprocal tariffs are likely to support the safe-haven metal.

The ongoing risk-off sentiment, combined with expectations that a tariff-induced slowdown in the U.S. economy could prompt the Federal Reserve to resume cutting interest rates, has led to a sharp decline in U.S. Treasury bond yields. This, in turn, weakens the U.S. Dollar (USD), pushing it to its lowest point since October 2024, and offers additional support for Gold. As such, it may be wise to wait for stronger signs of selling before concluding that the gold rally has topped out.

From a technical standpoint, the Relative Strength Index (RSI) on the daily chart remains in overbought territory, which is preventing gold bulls from entering new positions. Therefore, it would be prudent to wait for consolidation or a slight pullback before positioning for an extension of the multi-month bullish trend. Despite this, the broader trend is still heavily tilted in favor of the bulls, indicating that the most likely direction for Gold remains upward.

Any corrective dip below the Asian session low around $3,123 could present a buying opportunity, potentially limiting the downside near the $3,100 mark, which now serves as a key support level. A significant break below this point could lead to further unwinding of long positions, dragging the Gold price to around $3,076, the weekly swing low from Monday, followed by the $3,057-3,058 region, the $3,036-3,035 zone, and the psychological $3,000 level.

Paraphrasing text from "FXSTREET"all rights reserved by the original author