Market Analysis by Quasar Elizundia, Expert Research Strategist at Pepperstone
“In a session that tested the operational agility of the yellow metal, gold prices displayed a notable recovery on Thursday. After facing downward pressure in early trading, the precious metal managed to reverse course, posting gains of around 0.8%, reaffirming its traditional role as a safe-haven asset in times of economic turbulence.
Initially, gold was impacted by a U.S. court ruling against the tariffs imposed by the Trump istration. The International Trade Court’s decision, which deemed the president had overstepped his authority and ordered the annulment of these measures, was seen by the market as a factor that may ease global trade uncertainty. This, in theory, reduces the appeal of defensive assets like gold, explaining the early weakness that added to an already negative tone earlier in the week.
However, the outlook shifted following the release of new U.S. macroeconomic data, which rekindled investor caution. Weekly jobless claims data raised red flags: both initial claims (rising to 240,000, the highest in a month) and continuing claims (reaching 1,919,000, the highest since November 2021) suggest a potential weakening in the U.S. labor market. This early sign of weakness weighed on the U.S. dollar (DXY), which fell to 99.46, and sparked renewed demand for safety, directly benefiting gold.
Additionally, the confirmation of a contraction in U.S. GDP for Q1 2025, albeit with a slight upward revision (from -0.3% to -0.2% annualized), solidified the perception of an economic slowdown. A key takeaway was the slowdown in consumer spending, which grew just 1.2%, marking its weakest pace since Q2 2023, along with a 3.6% drop in corporate profits—the largest decline since late 2020. These factors have dampened market sentiment and ed demand for protective assets.
The combination of labor market stress and economic contraction, even amid the slight GDP revision, sets the stage for gold to regain prominence. This move has also been ed by a drop in the 10-year U.S. Treasury yield, which fell below 4.5%, reflecting adjusted expectations that the Federal Reserve may lean toward multiple rate cuts this year.
Ultimately, gold’s resilience on Thursday—reversing early losses to trade in positive territory—is a clear indication that investors continue to value its capital-preserving qualities in a context of heightened uncertainty and mixed signals from the world’s largest economy. Future performance will hinge on economic indicators, the legal trajectory of the Trump tariff ruling, and the Fed’s stance in an increasingly complex macroeconomic environment.
From a technical perspective, this session has allowed gold to remain above the key 23.60% Fibonacci retracement level. This validated may now be laying the groundwork for a new bullish impulse, redirecting analyst and trader attention toward the historical highs near $3,500 per ounce as the next major target.
