Gold Faces Correction as Overbought Signals Emerge Near $3,150

Gold (XAU) dropped below $3,000 per ounce, approaching the key support level of $2,950. This decline follows news that Donald Trump’s tariffs will exclude gold, reducing the urgency for US investors to import it. The removal of this short-term demand driver increases the likelihood of a correction. A break below $2,950 could trigger a deeper correction. On the other hand, if the price holds above $2,950, the uptrend may resume. However, short-term sentiment remains bearish for gold as momentum has shifted and immediate demand has faded.

On the other hand, the US Dollar Index remains volatile. The strong March BLS report shows 228,000 new jobs and an unemployment rate of 4.2%, as shown in the charts below. These data support the US dollar by reinforcing the strength of the labor market.

Moreover, a drop in heavy truck sales to 33,600 units reflects declining business confidence, hinting at broader economic weakness. If inflation stays above the Fed’s 2.0% target, the Fed may hesitate to cut rates aggressively, keeping the US dollar volatile.

US Treasury yields dropped sharply as markets priced in future rate cuts due to growing concerns over an economic slowdown. The 10-year yield fell below the 4.0% support level, signaling a potential decline toward 3.6%. However, inflationary pressures, highlighted by rising wages, may limit the Fed’s ability to ease aggressively. As a result, while yields could decline in the short term, the long-term outlook for bonds remains bearish, which may keep upward pressure on yields.

Gold (XAU) Technical Analysis

Gold Daily Chart – Correction

The daily chart for gold shows that the price has started a correction from the resistance area around $3,150 and is moving toward the 50-day SMA. The correction was triggered by overbought market conditions, as indicated by the RSI. However, the overall trend remains upward, and this pullback may present a buying opportunity for long-term investors.

Gold 4-Hour Chart – Ascending Channel

The 4-hour chart for gold shows that the price is trading within an ascending channel. The correction from the channel’s resistance has decreased the price to support levels. However, a break below $3,000 would signal a move toward $2,950.

Treasury Yields (TNX) Technical Analysis

10-Year Treasury Note Yield Daily Chart – Correction

The daily chart for US Treasury yields shows that yields have broken below 4.10% and continue to trade lower. The RSI indicates oversold conditions, suggesting a potential rebound. However, the break below 4.10% signals that yields may continue to decline.

10-Year Treasury Note Yield 4-Hour Chart – Correction

The 4-hour chart for US Treasury yields shows that the break below 4.10% has pushed yields down to 3.90%. This decline has brought yields into oversold territory, as indicated by the RSI, suggesting a possible rebound.

US Dollar (DXY) Technical Analysis

US Dollar Daily – Volatility

The daily chart for the US Dollar Index shows that the index rebounded from the support zone at 100.65 and is moving toward the resistance zone at 103.50. Friday’s movement remained within the previous day’s range, indicating strong volatility. A break above 103.50 would signal a potential return to the 105.20 area. However, a break below 100.65 would indicate strong bearish pressure.

US Dollar 4-Hour Chart – Descending Channel

The 4-hour chart for the US Dollar Index shows it has been trading within a descending channel. The recent rebound developed from channel support and has pushed the index toward channel resistance. A strong resistance level is seen at 104.70. A break above this level would indicate a positive development and potential trend shift.