Gold price hovers near a two-week low as optimism over US-China trade talks boosts investor sentiment. The precious metal remains under pressure due to a stronger US Dollar and easing inflation, while traders await key US economic data.
Key Takeaways
- Gold price trades around $3,232, under pressure for the third straight session.
- Renewed US-China trade hopes reduce demand for safe-haven assets like gold.
- A surprise US GDP contraction may limit further USD gains and support gold.
- Investors await key data, including US Manufacturing PMI and NFP report.
Market Context: Trade Optimism Weighs on Safe-Haven Demand
US President Trump’s comments on potential trade deals with China, India, Japan, and South Korea bolstered global risk appetite. His statement that a deal with China is “very likely” helped fuel optimism and caused a dip in safe-haven demand. This shift in sentiment supported equity markets and drew investors away from gold.
Meanwhile, the US Dollar gained strength in reaction to Trump’s remarks. This uptick in the greenback triggered further downside in gold, dragging its price down for the third consecutive day. The risk-on environment, supported by easing geopolitical tensions, continued to dampen interest in the yellow metal.
Technical Insights: Gold Bears Eye Key Fibonacci Levels
Gold price fell below a crucial support at the $3,265-$3,260 zone, marking a 38.2% Fibonacci retracement from recent highs. This breakdown sparked fresh selling pressure and opened the door for further downside movement. Traders are now watching for a decisive break below the 50% retracement level near $3,229-$3,228.
If this level gives way, gold could slide toward $3,200 and possibly $3,160, representing the 61.8% retracement zone. On the upside, initial resistance is expected near the $3,265 area, followed by $3,300. A break above this level could prompt short covering and lift prices toward the $3,350 and $3,368 regions.
Economic Factors: Weak US Data Clouds Dollar’s Outlook
Recent US economic releases have added a layer of complexity. Automatic Data Processing (ADP) reported a disappointing 62,000 increase in private jobs for April, well below market expectations. Meanwhile, the Bureau of Economic Analysis revealed the US economy contracted 0.3% in Q1 2025, reversing a 2.4% growth from the prior quarter.
Geopolitical Developments: Risks Linger Despite Trade Progress
Despite improving trade sentiment, geopolitical risks continue to simmer. Russia’s recent drone attack in southern Ukraine claimed two lives, and Kremlin officials hinted at large-scale mobilization capabilities. These developments could offer some support to gold, although they are currently overshadowed by broader market optimism.
Conclusion
Gold price remains under pressure due to positive risk sentiment and modest US Dollar strength. While weaker US economic data limits further USD gains, the yellow metal’s upside is capped without a clear break of resistance levels. Traders await US Manufacturing PMI and Nonfarm Payrolls data for further direction.
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FAQs About Gold Price Movements and US-China Trade Talks
1. Why is the gold price trading near a two-week low?
Gold price remains under pressure due to renewed optimism around US-China trade negotiations and a stronger US Dollar.
2. How do US-China trade talks affect gold prices?
Positive developments in trade talks reduce global risk sentiment, decreasing demand for safe-haven assets like gold.
3. What key support levels should traders watch in gold prices?
Critical support lies at the $3,229-$3,228 zone; a break below could push prices toward $3,160.
4. Could weaker US economic data support gold prices?
Yes, weak GDP and soft inflation increase expectations for Fed rate cuts, which can boost gold demand.
5. What economic events should gold traders monitor next?
Traders should watch for the US ISM Manufacturing PMI and Nonfarm Payrolls for clues on Fed policy.
6. How does a stronger US Dollar impact gold?
A stronger Dollar makes gold more expensive for other currency holders, lowering demand and pressuring prices.
7. Is geopolitical tension still supporting gold prices?
Yes, risks like the Russia-Ukraine conflict offer some support, though not enough to offset trade optimism.
