- Gold price retraces losses on Wednesday following a contraction in US GDP.
- Gold initially declined after President Trump signed an order to ease tariffs on automotive components.
- Technical analysis indicates that narrowing daily resistance and support levels for Gold suggest a heightened probability of a price breakout.
The price of gold (XAU/USD) is rebounding from earlier declines, trading near $3,288 on Wednesday, buoyed by the latest figures on US Gross Domestic Product (GDP) and Personal Consumption Expenditures (PCE). The precious metal is experiencing a second consecutive day of profit-taking after United States President Donald Trump signed an executive order aimed at easing tariffs on car parts, citing progress in ongoing trade negotiations, according to a Bloomberg report. This easing of trade tensions appears to be tempering the recent gold rally. However, the dip was short-lived as investors digested the implications of a contracting US economy.
The preliminary GDP reading, showing a contraction of -0.3%, will be a crucial data point for the Federal Reserve as it deliberates on interest rate policy at its May 7 meeting. This negative growth figure could potentially influence the Fed to maintain or even lower interest rates to stimulate economic activity. Furthermore, President Trump has once again publicly criticized the Fed and its chairman, Jerome Powell, asserting his superior knowledge of interest rates and expressing dissatisfaction with Powell’s performance, Bloomberg reported. These ongoing criticisms add another layer of complexity to the Fed’s decision-making process. Market analysts are closely watching upcoming inflation data and employment figures for further clues about the Fed’s likely course of action.
