Gold Price Returns to the Upside. But Why Has It Been Dropping?

Gold price has snapped its three-session losing streak, gaining 1% to trade at $3,013 at the time of writing. The resurgence was seen in the broader financial markets as renewed optimism of trade tariff negotiations took center stage. The commodity dropped by 3.3% in the last three trading sessions, taking a posture contrary to its position at a safe haven asset.

Why Is Gold Price Falling?

Many investors have found themselves in a a confusion as gold price joined the downtrend in recent days. Typically, safe haven assets appreciate when equities decline, as investors seek to cushion themselves from market risk. However, gold has been on the downtrend for the most part since US President Donald Trump announced reciprocal tariffs.

A possible explanation for the anomalous behaviour by gold is that the steep decline in equities markets likely pushed institutional investors to sell their bullion to cover margin requirements. For context, both the S&P500 and Dow Jones Index have declined by more than 9.5% in the last five trading sessions. Such a steep loss in a short period could have potentially exposed many traders to unforeseen margin call risks.

Nonetheless, gold price will likely resume the uptrend as central banks strengthen their vaults against the rising risks of a potential global recession. For instance, China bought 0.09 million troy ounces of gold in March, maintaining a buying streak that traces back to November 2024. More central banks will likely join the fray in the coming weeks if the trade tariff war escalates. That will add tailwinds to gold price.

Gold Price Prediction

Gold price pivot mark is at $3,003 and the Relative Strength Index (RSI) favours the upside to continue. The bulls will likely face the first resistance at $3,020. A stronger momentum will break above that level and test $3,032.

Conversely, breaking below $3,003 will favour the sellers to take control. That could see the first support established at $2,992. Breaking below that level will invalidate to upside narrative. Also, such momentum could push the price lower to test $2,976.

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