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Gold prices are holding a slight intraday gain near $3,132, following a new all-time high of $3,149. Traders prepare for the announcement of reciprocal tariffs by the US President, which may impact market dynamics.
As the week progresses, anticipation builds for the Nonfarm Payrolls release on Friday. Recent comments from a Federal Reserve official indicate uncertainty about interest rates amid ongoing recession concerns.
South African Mining Stocks Surge
Gold prices have driven South African mining stocks to a record monthly increase of 33%. The CME FedWatch tool suggests a reduced likelihood of a rate cut in May, with a 23.1% chance of rates remaining by June.
Physical demand for Gold and favourable macro conditions support predictions of prices rising to between $3,300 and $3,400 this year. Technical levels indicate resistance at $3,142 and potential upsides towards $3,200, while a pivot point at $3,109 may provide support.
Interest rates play a key role in influencing Gold prices. Higher rates tend to make holding Gold less attractive compared to interest-bearing assets, potentially lowering Gold values as the US Dollar strengthens.
The Fed funds rate, a critical benchmark, influences market expectations and investment decisions. Understanding these rates can guide strategies for Gold trading, which varies among brokers.
Market Uncertainty And Positioning
This piece already outlines a few clear pressure points in the current trading environment—namely, the prospect of reciprocal tariffs, the US employment data, and interest rate speculation. Taken together, they paint a picture of a market caught between cautious optimism and underlying instability.
With gold now hovering just below a new peak, having touched $3,149 briefly, there’s little doubt recent upward moves have prompted further attention. There’s been strength in demand from both institutional positions and physical buyers, especially across Asia and parts of Europe. Mining equities, including those in South Africa, haven’t just benefited—they’ve surged. A 33% spike in a single month is not subtle. It reflects heightened expectations or at least reactions to anticipated returns, possibly baked into higher spot price forecasts.
Now, regarding future rate moves: Barkin raised concerns earlier this week, suggesting that clarity on rate direction remains elusive. He didn’t explicitly rule out further hikes, but the door is wide open to more restraint. The futures market reflects this hesitancy. According to CME’s calculations, traders now see only a 23.1% chance of a rate cut by mid-year, which is notably less than what was priced in even a fortnight ago.
We, as participants, must now realign with the reality that support at $3,109 might not be retested unless there’s a surprise-driven risk-off. But from a trading angle, it’s more important to recognise how these levels interact with volume-heavy zones. Resistance around $3,142 is not unbreakable—but breakout conviction will likely hinge on Friday’s jobs numbers.
It’s becoming increasingly evident that gold isn’t just responding to macro pressures such as interest rates. The broader theme involves expectations around real yield, inflation creep, and what geopolitical friction could trigger next. With the Fed funds rate stuck at current highs, the opportunity cost of holding bullion remains prominent. If these rates stay elevated longer than expected, the attractiveness of gold (which yields nothing) is called into question. However, that negative is being washed out somewhat by haven demand, particularly as stagflation becomes less abstract and more practical.
With all the noise around potential reciprocal measures from the US administration, particularly aimed at key Asian economies, there’s strong reason to expect positioning to become more defensive. Short-term strategies might lean into volatility, while longer-term plays could stretch forecasts well beyond current resistance.
What matters now is how we act on this data. When forward guidance is murky, and when rate expectations flicker day by day, flexible setups with tighter stops—or even options—asymmetric trades might provide more meaningful protection.
The divergence between macro expectations and technicals should be top of mind. We aren’t likely to see cohesion between the two until after Friday’s release. The post-payrolls reaction will offer a more refined view. Stay adaptive.
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