Gold prices hovered around $3,230 during the Asian session on Wednesday, as renewed optimism over U.S.-China trade relations and a weaker-than-expected U.S. inflation report pressured the precious metal.
The announcement earlier this week of a pause in tariff escalation, reducing import duties on Chinese goods from 145% to 30%, was seen as a sign of de-escalating tensions between the two largest economies. This development has diminished demand for safe-haven assets like gold, which had previously surged due to global trade concerns in early 2025.
“The market is digesting a combination of dovish inflation data and geopolitical calm, which typically erodes the defensive premium embedded in gold,” said a commodities strategist at KCM Trade.
Fed Rate Cut Expectations and Dollar Weakness Provide Support
Despite the downward pressure, gold has found some support amid growing expectations that the Federal Reserve will cut rates later this year. The U.S. Consumer Price Index (CPI) rose 2.3% year-on-year in April, slightly below forecasts, while core CPI increased by 2.8%.
With inflation showing signs of softening, traders are now pricing in two rate cuts by year-end, starting as soon as September. A weaker U.S. dollar, which tends to support dollar-denominated commodities like gold, has also helped cushion the metal’s losses. The Dollar Index (DXY) fell below 101.60 on Tuesday, reflecting reduced expectations of aggressive Fed tightening.
Short-Term Gold Outlook
Gold and silver are expected to remain range-bound in the short term, with key breakouts dependent on upcoming signals from the Fed and potential technical pivots.
Gold Price Technical Analysis
Gold (XAU/USD) is holding near $3,230 after bouncing off support around $3,202 but remains confined within a descending channel. Price action continues to print lower highs and lower lows, reinforcing a bearish structure. The 50-day exponential moving average (EMA), currently at $3,273, is acting as dynamic resistance.
Unless bulls can push prices above the $3,258 pivot zone, downside risks persist. A clean break below $3,202 could lead to accelerated losses toward $3,156 and $3,103.
However, today’s slight rebound near the channel’s lower boundary suggests some short-term buying interest. If gold reclaims $3,258 and closes above it, the metal could see a rally toward $3,301.
