Daily Price Outlook
Gold prices (XAU/USD) have shown a bearish trend through the first half of the European session, trading around the $3,219 region. However, the global risk sentiment remains bolstered by signs of easing trade tensions between the US and China, the world’s two largest economies. This, coupled with a stronger US Dollar, has pushed traders away from the safe-haven precious metal for the third consecutive day.
US-China Trade Optimism Boosts Risk Appetite and Weighs on Gold
Investor sentiment received a boost following optimistic comments from US President Donald Trump, who indicated a “very good probability” of reaching a trade deal with China. He also mentioned potential trade agreements with other countries such as India, South Korea, and Japan.
These remarks add to the already positive outlook, easing some of the trade-related uncertainties that had previously weighed on markets. As a result, the US dollar saw upward momentum, further pressuring the gold price lower.
Therefore, the ongoing optimism surrounding US-China trade relations and the potential for economic recovery have been key drivers of this risk-on sentiment, which tends to divert flows away from safe-haven assets like gold.
Weak US Economic Data and Easing Inflation Support Gold Despite Bearish Momentum
In addition to the positive trade developments, the weak economic data from the US further supported bearish momentum for gold. On the data front, the US economy contracted by 0.3% in the first quarter of 2025, following a growth rate of 2.4% in the previous quarter.
Consequently, the disappointing GDP figures reignited concerns over a potential US recession, while a surprise drop in private sector employment, with ADP reporting only 62K job additions in April, further fueled worries.
Moreover, the Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, showed signs of easing inflation, with the YoY rate slipping to 2.3% in March, down from 2.5% in February. The core PCE, which excludes food and energy prices, also softened to 2.6%, reinforcing expectations of a more dovish Fed policy stance.
As a result, the weak economic data has intensified bets that the Federal Reserve will accelerate its rate-cutting cycle in June. Market expectations are now pricing in a 100-basis-point rate cut by the end of 2025.
Thus, the US Dollar may stay strong in the short term due to US-China trade optimism, but Fed rate cut expectations could limit its rise and support gold in the long run.
Geopolitical Tensions and US Economic Data to Impact Gold Prices
On the geopolitical front, the escalating tensions between Russia and Ukraine continue to contribute to market uncertainty. Russian drone attacks on Ukraine have resulted in civilian casualties, further fueling global risk aversion.
These factors may limit losses for gold in the short term as investors remain cautious about broader geopolitical risks.
Moving ahead, traders now look forward to key US macroeconomic releases, including the ISM Manufacturing PMI later this Thursday and the Nonfarm Payrolls report on Friday.
These releases will play a significant role in shaping the Federal Reserve's policy decisions and could have a big impact on gold prices.
If the data shows that the US economy remains weak, it could increase expectations for further interest rate cuts by the Fed. This would likely limit the strength of the US Dollar and provide some support for gold prices in the weeks ahead, as investors may look to it as a safe haven.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) remains entrenched in a descending wedge pattern, struggling to reclaim resistance above $3,260. The price has sharply declined from April highs, forming a series of lower highs and lower lows, with clear rejection from the $3,314 zone.
Candlestick structure is bearish, including a series of red-bodied candles and a breakdown through $3,261, reinforcing downside bias. The 50 SMA at $3,299 continues to act as dynamic resistance.
The RSI sits near 30.2, teetering on the edge of oversold territory without showing divergence—suggesting sellers remain in control. The presence of a spinning top followed by another bearish candle hints at indecision followed by renewed pressure.
If $3,222 breaks, expect a slide toward $3,188 and $3,153. For bulls to regain momentum, a decisive close above $3,260 and the wedge’s upper trendline is essential. Until then, short positions remain technically favorable.
Related News
- AUD/USD Price Analysis – May 01, 2025
JOIN LHFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.