Gold prices edged lower during early trading in Asia on Monday, with XAU/USD falling to around $3,275 per ounce as a stronger US Dollar and easing trade concerns between the US and China reduced demand for safe-haven assets.
The decline followed weekend trade talks in Geneva, where US and Chinese officials reported “substantial progress.” The diplomatic engagement, aimed at resolving longstanding trade tensions, prompted investors to reduce their exposure to gold. China’s Vice Premier He Lifeng described the talks as “an important first step” in stabilizing trade ties, while US Treasury Secretary Scott Bessent echoed the positive sentiment.
Despite the upbeat developments, analysts warned that broader trade uncertainty continues to support gold. David Meger, director at High Ridge Futures, noted that “tariff-related risks remain a significant factor” in sustaining gold’s appeal amid ongoing global volatility.
Geopolitical Risks Still Loom
In addition to trade concerns, geopolitical instability continues to cast a shadow over markets. Tensions between India and Pakistan—despite a recent ceasefire—underscore the fragile nature of global peace and stability. Such conditions may continue to create volatility in the gold market, especially if risk sentiment deteriorates.
Investors now turn their attention to key US economic data, with the Consumer Price Index (CPI) set to be released Tuesday. The Producer Price Index (PPI) and retail sales data, due Thursday, are also expected to influence market direction and provide clues about the Federal Reserve’s monetary policy path.
Gold (XAU/USD) Technical Analysis: Consolidation Between $3,200 and $3,500
On the daily chart, gold remains within an ascending broadening wedge pattern and is consolidating between the $3,200 and $3,500 levels. After finding key support at $3,200, the price formed an inside bar and then rebounded to test the wedge’s resistance near $3,500. However, the emergence of a bearish hammer pattern at the top suggests potential exhaustion. The red circle at the $3,150 level highlights a pivotal support area, which could determine the next significant move.
On the 4-hour chart, gold continues to consolidate at the upper resistance of the ascending channel. The Relative Strength Index (RSI) remains below the midpoint, indicating weakening momentum and the potential for further downside. Analysts identify the $3,100 to $3,150 range as a critical support zone in the short term.
US Dollar (DXY) Technical Analysis: Rebound Faces Resistance
The US Dollar Index (DXY) is rebounding after finding solid support near the 98.00 mark. The index is currently testing resistance around 100.65, a level associated with a previous breakout. While the short-term trend shows strength, the 50-day simple moving average near 102 remains a key barrier. Analysts caution that, despite the recovery, the broader trend remains bearish and a pullback toward the 97 level is possible.
On the 4-hour chart, DXY’s rebound is supported by an inverted head-and-shoulders formation and oversold RSI conditions. However, strong resistance at 101.60 could cap the rally and potentially trigger a renewed downward move.
Outlook
While gold faces immediate pressure from a stronger dollar and easing trade tensions, it remains supported by lingering global uncertainties and technical consolidation. Market participants are expected to monitor US inflation and retail data closely this week for further direction. Any sign of renewed geopolitical strain or a shift in Fed policy stance could quickly alter gold’s trajectory.
