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Gold prices (XAU/USD) continue their decline for the second consecutive day on Wednesday, following a rejection from the $3,500 psychological level, a fresh record high. The price has dropped toward the $3,300 range as the safe-haven demand for gold recedes.

The pullback in gold prices is partly driven by signals from US President Donald Trump's administration suggesting a potential easing of the tariff conflict with China, raising hopes for a trade agreement. Additionally, Trump's decision not to follow through with threats to remove Federal Reserve Chair Jerome Powell, along with reduced geopolitical tensions, has boosted investor sentiment and weighed on gold.

Meanwhile, the US Dollar (USD) is struggling to recover from a multi-year low due to growing concerns about the US economy and expectations for more aggressive policy easing from the Fed. This could provide some support for gold, a non-yielding asset, and warrants caution before concluding that gold prices have peaked in the short term.

From a technical standpoint, gold appears to be stabilizing below the 23.6% Fibonacci retracement level of the recent price surge from the mid-$2,900s region, suggesting initial signs of potential exhaustion in the bullish trend. However, daily oscillators remain in positive territory, signaling that further caution is needed before making any aggressive bearish moves. A drop below the low of the Asian session, around $3,315, could find support near the 38.2% Fibonacci level at around $3,289. A decisive break below this level could trigger a more significant corrective decline.

On the upside, the $3,370 area (23.6% Fibonacci level) is now an immediate resistance level, with $3,400 acting as the next key hurdle. If gold continues to see buying momentum, it could rise to the $3,424-$3,425 resistance zone, and a sustained push above this level may pave the way for another attempt to break the $3,500 mark. A strong move above this level would reinforce the ongoing uptrend that has been in place for the past several months.

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