Gold price (XAU/USD) struggled to sustain its modest rebound from the $3,300 level, remaining below the overnight high through Tuesday’s early European session. Market participants appear cautious, awaiting further clarity from ongoing US-China trade negotiations before making new directional moves. Meanwhile, a slightly stronger US Dollar (USD) has weighed on bullion’s gains.
Investor sentiment is balanced by expectations that the Federal Reserve (Fed) could implement additional rate cuts in 2025 and rising concerns over the US fiscal outlook. These factors limit USD bullishness, providing some support for gold. Additionally, persistent geopolitical tensions and general market unease continue to underpin demand for the safe-haven metal. However, the overall mixed fundamental environment calls for prudence among aggressive traders.
Market Movers: Trade Talks and Economic Data Influence Gold
The latest round of trade discussions between China and the US in London extended into a second day on Tuesday, fostering optimism for a potential agreement between the two largest global economies. This positive risk sentiment has led to some selling pressure on gold during intraday trading.
Last Friday’s stronger-than-expected US Nonfarm Payrolls (NFP) report reduced expectations of near-term Fed rate cuts, bolstering the US Dollar and applying headwinds on the non-yielding gold price. Nevertheless, the CME Group’s FedWatch Tool shows traders still assign nearly a 60% probability to a Fed rate cut in September, while concerns over US government debt restrain further USD gains.
Geopolitical risks intensified as Russia launched a large-scale airstrike on Ukraine, deploying around 500 drones and missiles. This escalation adds uncertainty to the markets and tempers bearish bets on gold, especially in the absence of major US economic releases this week.
Investors now await key US inflation data, with the Consumer Price Index (CPI) and Producer Price Index (PPI) scheduled for release on Wednesday and Thursday. These reports are expected to offer critical insights into the Fed’s future monetary policy, potentially influencing USD demand and gold price movements.
Technical Outlook: Key Moving Averages Define Gold’s Next Moves
From a technical standpoint, gold’s failure to hold above the 200-hour Simple Moving Average (SMA) near $3,333-3,334 during overnight trading has favored bearish momentum. Hourly chart oscillators are also showing increased downside pressure, suggesting potential further intraday declines. A break below the $3,293-3,294 support area—the overnight low—would confirm bearish control and could see gold slide towards $3,245-3,246 (the May 29 swing low), and possibly the $3,200 zone.
Conversely, the 100-hour SMA, positioned around $3,333-3,334, remains a critical resistance level. A decisive break above this hurdle could trigger short-covering and push gold prices towards the next resistance at $3,352-3,353. If momentum continues, gold could test the $3,377-3,378 barrier, and potentially attempt to reclaim the psychologically important $3,400 mark.
