Gold Remains Firm Above $3300 as US Dollar Weakens, But Overbought Signs Signal Caution

April 18, 2025 – DailyForex.pk
Gold prices (XAU/USD) are holding steady above $3,300 per ounce, despite short-term selling pressure and rising concerns that the market is entering overbought territory. At last check, spot gold was trading at $3,316.90, gaining nearly 2.5% for the week, and up 28% year-to-date.

Wednesday’s $100 intraday rally raised eyebrows, with some analysts calling it a “blowoff top” — a classic technical pattern suggesting a sharp peak before a potential correction.

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📈 Technical Signals Flash Overbought Warning

• Gold has rallied 13% or $360 in just one week
• The daily MACD has reached its highest level since April 2011, a time closely linked with gold’s previous all-time high
• Analysts warn that while the trend remains bullish, buyers should proceed cautiously at current levels

Lukman Otunuga, Senior Analyst at FXTM, noted that gold’s rise above $3,350 indicates strong bullish sentiment, but also heightens the chance of a technical correction.

“Depending on the depth of the pullback, prices may slide toward $3,250, $3,140, or even test $3,000,” he stated. “On the flip side, reliable support at $3,300 could push gold toward $3,400 and beyond.”

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💵 US Dollar Weakness Continues to Support Gold Prices

The US Dollar Index (DXY) is on track to close the week at a three-year low of 99.49, providing consistent upside momentum for gold. While the dollar’s reserve currency status is not under immediate threat, Trump’s trade policies and domestic instability are weakening global confidence.

“There’s no other currency ready to replace the dollar yet. But in this uncertain era, gold is becoming the default alternative,” said one senior strategist.

Currency analysts at Brown Brothers Harriman echoed that view, citing a decline in trust in US economic leadership and ongoing policy uncertainty as reasons for the dollar’s fragility.

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🗣️ Trump vs. Powell Adds Volatility

Markets were rattled after President Trump lashed out at Federal Reserve Chair Jerome Powell, accusing him of being “too late and wrong.” This follows Powell’s neutral stance at the Economic Club of Chicago, where he acknowledged inflation risks but refrained from endorsing further rate hikes.

“Powell’s termination cannot come fast enough,” Trump posted on social media.

The public feud between the White House and the Federal Reserve is raising uncertainty in bond markets and adding to gold’s safe-haven appeal.

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📊 ECB Cuts While Fed Holds – Policy Divergence Widens

While the European Central Bank (ECB) surprised markets by cutting interest rates and signaling more to come, the Fed remains cautious. This divergence in policy paths is contributing to unusual market behavior, with gold prices climbing despite traditionally bearish rate conditions.

“It’s rare to see such a wide yield divergence without a correction,” one analyst noted. “But the current geopolitical climate may justify the imbalance — for now.”

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🔍 Key Gold Levels to Watch

• Immediate support: $3,245 (former resistance)
• Next supports: $3,167 → $3,100 → psychological floor at $3,000
• Deeper flush: $2,956 → long-term safety net at $2,790
• Resistance: $3,350 → $3,400 → $3,500

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🧠 Outlook: Gold Remains Bullish But Due for a Breather

Despite being technically overbought, gold remains well-supported by:

• A weakening US dollar
• Geopolitical and economic uncertainty
• Diverging central bank policies
• Risk-off sentiment ahead of a quiet international trading calendar due to Easter holidays

For now, gold may consolidate between $3,250 and $3,350, but the broader trend remains bullish unless key supports break.

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