Gold Rebounds After Losing $3,300 Support: Stronger Dollar and Equity Inflows to Blame

Market Overview

Spot gold edged higher in early Asian trading on Wednesday, currently hovering around $3,305 per ounce—slightly above Tuesdays closing price. The previous session saw a sharp intraday drop below the key psychological threshold of $3,300, with prices bottoming at $3,285 and closing down 1.25%, triggering heightened market attention. The downturn was not only a result of technical pullback but also a reflection of three interlinked macroeconomic forces.

1. Stronger U.S. Dollar Weighs Directly on Gold

Gold typically moves inversely with the U.S. dollar. On Tuesday, the dollar index strengthened significantly, rising as much as 1% against the yen and gaining broadly across major currencies. As gold is priced in dollars, the greenback‘s rally made bullion more expensive for holders of other currencies, dampening international demand and putting direct pressure on prices. Despite mixed U.S. economic data, the dollar’s safe-haven appeal remains intact in the short term.

2. Equities Draw Capital Away from Safe-Haven Assets

A sharp rebound in U.S. equities diverted flows away from gold. All three major indexes rose Tuesday, with the Dow surging 740 points, the S&P 500 gaining 2.05%, and the Nasdaq climbing 2.47%, led by a resurgence in tech stocks. As risk appetite returns, demand for defensive assets like gold has weakened, exerting short-term downside pressure.

3. Dovish Fed Remarks Overshadowed by Risk-on Sentiment

Minneapolis Fed President Neel Kashkari emphasized the need to hold rates steady until the inflationary impact of tariffs is better understood—a dovish tone that would typically support gold. However, current market attention is focused on corporate earnings, the AI boom, and progress on tax reform, leading investors to favor high-beta, growth-oriented assets. For now, gold's defensive edge is being overshadowed.

4. Mixed U.S. Economic Data Sends Conflicting Signals

Mays Conference Board Consumer Confidence Index unexpectedly jumped to 102, signaling improving sentiment and a “wealth effect” driven by market gains. In contrast, durable goods orders dropped sharply, and core capital goods shipments fell 0.1%, reflecting corporate hesitation in capital expenditures. This divergence—between resilient consumers and cautious businesses—suggests the U.S. economy may be approaching an inflection point.

Chart: U.S. April Durable Goods Orders | Source: ZeroHedge

Particularly noteworthy is the caution among businesses amid rising tariffs and delays in tax legislation. If labor market data also begins to weaken, golds safe-haven appeal could regain traction over the medium to long term.

Conclusion

Gold currently sits at a critical juncture, with price direction influenced by the U.S. dollars trajectory, equity market momentum, policy expectations, and upcoming inflation data. Investors should closely monitor macroeconomic indicators and shifts in risk sentiment to adjust their positions accordingly. The yellow metal faces a dual test of monetary policy outlook versus economic reality.

Key upcoming catalysts include Wednesday‘s FOMC meeting minutes, Thursday’s U.S. Q1 GDP revision and initial jobless claims, and Fridays core PCE inflation reading—all crucial in shaping expectations around economic resilience and inflation persistence.

Technical Outlook

Golds immediate support sits at $3,300. A decisive break below could open downside targets at $3,285 and $3,250. Conversely, if risk-off sentiment returns, prices may retest resistance at $3,325 and $3,350. With the dollar entering a consolidation phase, heightened volatility in gold is likely. Short-term traders are advised to steer clear of the whipsaw range.

• Resistance: $3,325 / $3,365

• Support: $3,248 / $3,285 / $3,300

Risk Disclaimer:

The views, analysis, research, and price levels mentioned above are for general market commentary only and do not represent the stance of this platform. All readers should exercise independent judgment and assume full responsibility for their trades. Trade cautiously.