Gold prices declined sharply on Monday, hitting a one-and-a-half-week low near $3,216 per ounce during early European trading, as improving sentiment over US-China trade relations and easing recession fears continue to dampen demand for the safe-haven asset.
Investors reacted positively to the latest developments from high-level trade talks between the US and China, which concluded on Sunday in Switzerland. US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer confirmed that a trade agreement had been reached. China’s Vice Premier He Lifeng echoed the upbeat tone, describing the negotiations as having made “substantial progress” and achieving consensus on key issues.
Vice Premier He also announced plans to release a joint statement in Geneva on Monday, calling it “big news and good news for the world.” The announcement fueled a broader risk-on mood in financial markets, contributing to gold’s decline.
Meanwhile, the US Dollar strengthened further, reaching its highest level since April 10, supported by the Federal Reserve’s hawkish stance. The central bank signaled a continued pause on interest rate cuts, reinforcing expectations that rates will remain elevated for the foreseeable future. This added pressure on gold, which typically moves inversely to the dollar.
Market participants are now turning their attention to upcoming US inflation data and a scheduled speech by Fed Chair Jerome Powell on Thursday. Both events are expected to provide fresh insights into the central bank’s policy direction.
In other geopolitical developments, Russian President Vladimir Putin has agreed to hold direct talks with Ukrainian President Volodymyr Zelenskyy on Thursday, May 15, without preconditions. Additionally, Hamas announced plans to release Edan Alexander, the last known American hostage in Gaza, and confirmed direct negotiations with the US aimed at establishing a ceasefire and facilitating aid delivery.
Technical Outlook: Gold Eyes $3,200 Support Zone
From a technical standpoint, gold faces increasing downside risks. A sustained drop below the $3,295–$3,290 zone—marked by the 100-period Exponential Moving Average (EMA) on the four-hour chart and the 61.8% Fibonacci retracement of the recent rally—could trigger further bearish momentum.
Technical indicators on lower timeframes show growing negative traction, suggesting the potential for additional declines. A move below the Asian session low of $3,253–$3,252 would reinforce the bearish trend and open the path toward the monthly low at approximately $3,200. A decisive breach of that level could resume the broader corrective pullback from April’s all-time high of $3,500.
On the upside, initial resistance lies at the $3,300 mark. Any rebound may face selling pressure near $3,317–$3,318, the peak from the Asian session. A clear break above that zone could spark short-covering and lift prices toward $3,345–$3,347, aligning with the 38.2% Fibonacci retracement level. Further gains might challenge the $3,360–$3,365 resistance range. A decisive move beyond this barrier would negate the current bearish outlook and re-establish a trajectory toward $3,400.
As the global risk sentiment improves and the US dollar remains strong, gold may continue to face headwinds in the short term, particularly in the absence of major US economic data early in the week.
