Photo by Dmitry Demidko on Unsplash
 

Gold (XAUUSD) prices have pulled back after reaching record highs. Profit-taking followed a sharp rally in gold futures. The drop was triggered by U.S. tariffs on one-kilo gold bars, raising concerns over supply from major hubs like Switzerland and London. Escalating trade tensions and fresh tariff measures have added to global market uncertainty. Weak U.S. economic momentum and a struggling dollar continue to support safe-haven demand. Concerns about the Federal Reserve’s future direction are sustaining investor interest in gold. Expectations of significant rate cuts are also supporting demand despite the recent dip.
 

Gold price drops despite Dollar weakness and rate cut hopes

The recent drop in gold prices is largely driven by profit-taking. Traders took profits after gold futures surged to new highs. The immediate trigger came from U.S. tariffs on one-kilo gold bars. The Financial Times reported the development, citing a letter from Customs Border Protection outlining the new measures. Switzerland, the world's largest gold refining hub, stands at the center of attention, and London could face similar trade challenges.

President Trump’s reciprocal tariffs on dozens of countries took effect on Thursday. Heavy import duties were applied to Switzerland, Brazil, and India. Trump issued a warning of further tariffs on China and Japan linked to their Russian oil imports. These actions have heightened global trade uncertainty and fueled concerns in commodity markets.

With the U.S. economy losing momentum, the tariffs are intensifying market concerns. A weak dollar limits gold’s downside. Questions over Fed independence are growing after Trump nominated Stephen Miran, seen as a possible successor to Jerome Powell. Expectations for 100 basis points of rate cuts later this year remain high. Persistent trade worries and dollar weakness are supporting dip-buying interest. Despite the pullback, interest in gold stays strong ahead of next week’s U.S. CPI report.
 

Gold rally accelerates after inverse head and shoulders pattern breakout

The gold chart below shows a strong bullish trend. The neckline breakout in 2024 confirmed a major technical pattern, an inverse head-and-shoulders formation. This pattern often signals the start of a long-term uptrend. The breakout took place around $2,100, after which gold surged sharply with minimal pullbacks.
 

(Click on image to enlarge)

The candles following the breakout are long and mostly green, indicating strong momentum and persistent buying pressure. Gold’s consolidation near $3,350 is limited. The chart highlights "No sign of major correction in gold," indicating buyers remain in control. Volume analysis and price action also suggest a strong uptrend with no bearish reversal patterns.

Support remains near the breakout level around $2,100, but the price is far above it. The absence of a major pullback after such a strong rally reflects market confidence. If gold holds above $3,300, the next psychological target is $3,500, with potential to move toward $3,800. On the downside, only a close below $3,000 would signal a deeper correction risk. Until then, the technical structure remains firmly bullish.
 

Conclusion

Gold has retreated from all-time highs as investors book profits. The pullback came after news of U.S. tariffs on one-kilo gold bars, which could disrupt supplies from Switzerland and London. Safe-haven demand is strengthening due to tariffs, surging trade tensions, and concerns about the Fed’s independence. Weak U.S. economic momentum and expectations of aggressive Fed rate cuts keep downside risks limited. Despite the recent dip, the technical chart shows no sign of a major correction. Buyers remain in control, and momentum points to further gains. 

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