Gold prices (XAU/USD) have seen a partial recovery from earlier intraday losses but remain under pressure, trading below the $3,400 mark as the European session begins on Wednesday. Despite a lack of meaningful progress from the US Dollar (USD), which continues to hover near its weekly lows, persistent geopolitical uncertainties—including the ongoing Russia-Ukraine conflict, Middle East tensions, and escalating military activity along the India-Pakistan border—are providing some support to the safe-haven precious metal.
Optimism surrounding the US-China trade talks, set to take place in Switzerland this week, is helping maintain a positive risk tone in global markets. However, this optimism is working against gold prices, as investors continue to focus on the broader economic outlook rather than safe-haven assets. Gold price traders are also adopting a cautious stance ahead of the Federal Open Market Committee’s (FOMC) two-day monetary policy meeting, with many waiting to see how the Federal Reserve’s policy statement and Chair Jerome Powell’s comments may influence market expectations and the USD.
Market Movements and Global Tensions
US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer are scheduled to meet Chinese counterparts in Switzerland for talks aimed at easing tensions from the ongoing trade war. This marks the first direct discussions between the two nations since the US imposed tariffs on Chinese imports. While these talks are seen as a step toward de-escalation, the trade war remains a key source of uncertainty.
President Donald Trump also stirred market nerves on Tuesday by announcing plans to review potential trade deals in the coming weeks, including imposing new tariffs on movies and pharmaceuticals. This ongoing uncertainty continues to fuel demand for gold as a safe-haven asset.
Geopolitical risks remain high as well. A Russian official confirmed plans for a unilateral ceasefire between May 8 and 11, but also warned of an immediate response if Ukraine fails to adhere to the ceasefire. Meanwhile, in the Middle East, Israel’s security Cabinet approved a plan to intensify its military offensive in Gaza, with further escalations expected in the coming days.
FOMC Meeting and the US Dollar
Market participants are closely watching the Federal Reserve’s decision on Wednesday, with particular attention on Powell’s comments at the post-meeting press conference. Investors are eager to gain insights into the Fed’s stance on future rate cuts, which will influence the direction of the US Dollar and, consequently, gold prices. The US Dollar’s performance will be key in determining gold’s trajectory in the near term.
Technical Outlook: Bullish Above $3,360 Support
From a technical standpoint, gold prices recently broke through the $3,360-$3,365 resistance zone, which is now serving as a support level. Gold bulls remain in control as long as prices stay above this support area. Oscillators on the daily chart are showing strength, indicating that the path of least resistance for gold remains upward.
However, gold’s rally has faced resistance near the $3,430-$3,435 range, which is seen as a critical level. A sustained break above this resistance could potentially drive gold toward the all-time high of $3,500.
On the downside, if gold fails to hold above the $3,360 level, support may be found around the $3,328-$3,327 region, followed by the $3,300 mark. A break below these levels could signal further declines, with potential support near $3,265-$3,260, and the $3,223-$3,222 range—an area that held up as a recent swing low.
As markets await further developments from the FOMC and trade talks, gold’s price action is likely to remain volatile, with a mixed outlook as investors balance geopolitical risks with potential shifts in US monetary policy.
