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Gold Retreats from Record High Amid Fed Stagflation Warning; Markets End Mixed
Gold prices eased on Thursday, pulling back from an all-time high of $3,357 per ounce to settle around $3,319, down 0.60% on the day. The decline came after a strong rally that saw the metal gain nearly $400 over the past seven sessions, largely fueled by uncertainty surrounding U.S. trade policy and broader macroeconomic concerns.
The market reacted to Federal Reserve Chair Jerome Powell’s remarks on Wednesday, which signaled a potential conflict between the Fed’s dual mandate of price stability and full employment. Powell acknowledged the risk of stagflation, noting, “We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension… If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close.”
Markets Mixed as Dow Declines on UnitedHealth Drop
U.S. equities closed the week on a mixed note ahead of the Good Friday holiday. The Dow Jones Industrial Average dipped, weighed down by a sharp decline in UnitedHealth Group shares. In contrast, the S&P 500 and Nasdaq Composite posted modest gains.
Treasury yields climbed, with the U.S. 10-year note rising five basis points to 4.333%, and real yields following suit—further pressuring gold. The yield on the 10-year Treasury Inflation-Protected Security (TIPS) rose to 2.163%.
Macroeconomic Highlights: ECB Rate Cut, Strong U.S. Labor Data
In a key policy move, the European Central Bank reduced interest rates by 25 basis points, widening divergence with the Federal Reserve and contributing to volatility across global markets. Meanwhile, U.S. economic data continued to reflect resilience in the labor market. Initial jobless claims dropped to 215,000—better than both the prior week’s reading and market expectations.
Building permits rose 1.6% to 1.482 million, signaling potential strength in future construction. However, housing starts declined sharply to 1.324 million from 1.494 million, indicating near-term softness in the residential sector.
Money market traders now price in 86 basis points of Fed rate cuts by the end of 2025, with the first reduction expected as early as July.
Trade Developments and Global Policy Divergence
Former U.S. President Donald Trump struck an optimistic tone on trade negotiations, stating that talks with both the European Union and China are progressing well. His comments came amid rising tensions in global trade and a backdrop of shifting monetary policies across key economies.
Technical Outlook: Gold Maintains Bullish Structure Despite Pullback
Despite Thursday’s pullback, gold’s broader uptrend remains intact. The Relative Strength Index (RSI) remains elevated but has yet to enter extreme overbought territory, suggesting a potential short-term consolidation.
Immediate support is seen at $3,300, followed by the April 16 low of $3,229. On the upside, a breakout above $3,350 could pave the way toward testing the year-to-date high and possibly the $3,400 mark in the near term.
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