Daily Price Outlook
During Wednesday’s session, gold (XAU/USD) pulled back from its recent gains, slipping to $3,380 as traders weighed the impact of renewed US-China trade optimism and awaited the outcome of the Federal Reserve’s policy meeting.
The yellow metal snapped a two-day winning streak as investors took profits and shifted focus to improving diplomatic signals between the world’s two largest economies.
Gold Pressured by US-China Trade Talks and Diminished Safe-Haven Demand
However, the latest retreat in gold prices was driven by fresh hopes of progress in US-China trade relations. Statements from both Washington and Beijing confirmed that trade discussions are set to resume this weekend in Switzerland.
US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will meet with China’s Vice Premier He Lifeng.
Though the talks are initially aimed at de-escalating tensions rather than finalizing trade agreements, the move was interpreted as a positive step toward easing tariff-related uncertainties.
This development reduced demand for traditional safe-haven assets like gold, even amid heightened geopolitical risks in South Asia.
Reports from Pakistan indicated it had shot down five Indian fighter jets and captured soldiers in retaliation for Indian air strikes.
However, the market reaction to the military escalation was muted, as optimism surrounding trade talks took center stage, offsetting the usual bullish impact of geopolitical tensions on gold.
Traders Cautious Ahead of Fed's Interest Rate Decision Amid Political Pressure and Economic Uncertainty
Traders also remained cautious ahead of the Federal Reserve's upcoming interest rate decision scheduled for later in the day.
According to the CME FedWatch Tool, markets are pricing in a 95.6% probability that the Fed will hold rates steady.
This suggests that a rate cut would come as a significant surprise, especially amid persistent political pressure from President Donald Trump urging the central bank to ease monetary policy.
Fed officials have signaled that future decisions will be guided by data and the broader economic outlook.
With inflation still being monitored closely and the full impact of tariffs yet to be felt, policymakers appear inclined to maintain the current stance, keeping investors on edge.
GOLD (XAU/USD) – Technical Analysis
Gold is trading near $3,393, consolidating just above the 23.6% Fibonacci retracement at $3,381, a key level after its recent bullish surge.
The 50-day Simple Moving Average (SMA) at $3,302 is providing a robust support base, aligning with the 61.8% Fibonacci level at $3,301, reinforcing the bullish structure.
The recent uptrend is marked by a series of higher lows, supported by a rising trendline from late April, indicating continued buying interest.
Candlestick analysis reveals a potential Doji near the $3,393 resistance, reflecting market indecision at this critical level.
A break above this zone could pave the way for a rally toward the next resistance at $3,430, followed by the psychological $3,450 mark, aligning with the recent swing high.
However, a failure to clear this resistance could trigger a pullback toward the 38.2% Fibonacci level at $3,350, with deeper support at $3,326 and $3,302, the latter aligning with the 50-SMA.
Momentum indicators are mixed. The Relative Strength Index (RSI) is hovering near 71, suggesting overbought conditions, which may prompt short-term profit-taking.
However, the overall trend remains bullish as long as prices hold above the key support at $3,348, a critical pivot point.
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