- Gold declines on Tuesday alongside falling yields and equities.
- The Trump administration seeks to tighten semiconductor restrictions on China.
- Gold retreats toward $2,940 but remains under pressure amid a broader market sell-off.
Gold (XAU/USD) surged to a new all-time high of $2,956 on Monday before reversing course as market sentiment deteriorated. By Tuesday, the precious metal was trading around $2,940 following the Trump administration’s announcement of plans to impose stricter restrictions on China’s technological advancements. The strategy includes tighter semiconductor controls and diplomatic efforts to push allies toward limiting China’s access to key chip technology.
The news has set a risk-off tone in global markets. Investors are flocking to bonds as a safe haven, driving yields lower due to the inverse relationship between bond prices and yields. Equities are under heavy selling pressure, with broad-based declines across Asian and European markets, as well as U.S. equity futures. Aside from speeches by three Federal Reserve (Fed) officials, Tuesday’s calendar is relatively light ahead of Friday’s release of the Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge.
Daily Market Movers: Gold Holding Firm Amid Uncertainty
- The Trump administration is expanding curbs on China’s semiconductor sector, aiming to restrict its domestic chip production and hinder AI and military advancements, Bloomberg reports.
- The CME FedWatch Tool shows a rising probability of a 25-basis-point Federal Reserve rate cut in June, now at 50.0%, while the likelihood of a rate pause has dropped to 32.6%, driven by Tuesday’s decline in U.S. yields.
- Investors are closely watching January’s PCE Price Index, set for release on Friday, with expectations of a further cooling in inflation to its slowest pace since June, according to Reuters.
- Fed Vice Chair for Supervision Michael Barr will address key financial stability issues in New Haven, Connecticut, at 16:45 GMT.
- Richmond Fed President Tom Barkin is scheduled to discuss "Inflation Then and Now" at a Rotary Club event in Richmond, with a Q&A session expected around 18:00 GMT.
- Dallas Fed President Lorie Logan will speak at the Bank of England’s annual BEAR research conference in London at 21:15 GMT, focusing on the future of the Fed’s balance sheet.
Technical Analysis: Gold Faces Selling Pressure
A drop below the daily Pivot Point near $2,943 is signaling potential downside for gold on Tuesday. Early Asian session buyers attempted to push prices higher but failed to sustain momentum. The S1 support level at $2,930 has held for now, though a breakdown could open the door for a decline toward S2 support at $2,908.
On the upside, the key resistance level remains Monday’s all-time high of $2,956. A break above this level would target the R1 resistance at $2,964, followed by R2 at $2,977, with the psychological $3,000 mark in sight.
To the downside, S1 support at $2,930 aligns with Monday’s U.S. session low. If breached, the $2,900 level and S2 support at $2,908 will become the next key levels to watch.
