Gold prices fluctuate slightly above $3,100 amid rising US Treasury yields, which increase by over seven basis points to 4.230%. US President Donald Trump has introduced 10% tariffs on all imports, effective April 3, alongside varying reciprocal tariffs for different countries, including 34% for China.
Gold remains volatile, trading in the range of $3,100 to $3,135. Should prices rise, they could challenge the current record of $3,149; however, a decline below $3,100 may lead to support at $3,050.
Central Bank Influence On Gold
Central banks are the largest gold holders, with purchases reaching 1,136 tonnes valued at around $70 billion in 2022. Economic instability and interest rates are key factors affecting gold prices, which tend to rise with lower rates and a weaker US Dollar.
With US Treasury yields jumping by more than seven basis points to 4.230%, the recent uptick in bond returns puts pressure on non-yielding assets such as gold. Higher yields tend to make alternatives like Treasury securities comparatively more attractive, drawing investor interest away from metals that offer no income. This friction between bullish gold sentiment and the weight of rising yields hints at an environment where short-term positioning may need to remain flexible.
Following Trump’s announcement of broad-based tariffs—10% across the board with targeted levies such as 34% against China—the prospect of trade friction has resurfaced. These measures are likely to heighten inflation expectations if producers and importers raise prices to offset the increased cost of foreign goods. If we begin to see markets pricing in sticky inflation, we could witness sustained demand for hedging assets, although the strong Dollar that often accompanies such inflation fears might temper gold’s gains. In our view, it’s essential to remain responsive rather than predictive, weighting directional conviction alongside rate developments.
Gold has been flickering within the $3,100 to $3,135 corridor, which even on its own suggests reluctance to honour either side of the recent move. This narrow bracket of activity often precedes liquidity events or macro surprises. If the metal catches momentum above $3,135, a retest of the previous high at $3,149 would likely follow. On the other hand, slipping beneath $3,100 opens the path toward $3,050, which has seen buying interest historically. That said, a clean breach would shift technical sentiment toward short-term weakness.
Balancing Risk Amid Mixed Signals
The role of central banks remains unmistakable. With institutions accumulating over a thousand tonnes in 2022—roughly $70 billion—they’ve become a powerful floor beneath the market. These entities tend to buy during economic dislocation or policy uncertainty, amplifying demand independent of speculative flows. Their behaviour often diverges from private funds, so it’s helpful to watch activity in physical markets or reserve disclosures to gauge undercurrents in demand.
As rates rise, we often see gold prices struggle unless the market starts to believe the rate increases will slow or reverse. Since the metal generally trades inversely to the US Dollar and interest rates, a continued hawkish tone from the Federal Reserve could cap upside unless countered by other forces like geopolitics or policy easing abroad. Retaining a view informed by real yields rather than just nominal moves could sharpen positioning.
At current levels, participants ought to recognise that gold is walking a tightrope between inflation fears, rising yields, and steady buying by central banks. We see this as a time to avoid outsized directional exposure. Let the market reveal its hand. Keep a close watch on upcoming inflation prints and central bank minutes, particularly if they shift expectations on future rate paths. In this setting, responsiveness often outweighs static strategy.
Above all, use levels like $3,149 and $3,050 not just as technical points but as opportunities to reevaluate whether underlying macros support current conviction. We also keep an eye on positioning data—extreme long or short bets can spark volatility when sentiment unwinds.
