GOLD Analysis
Afternoon: Gold Retreats to $3,280 as Trade Optimism and Dollar Strength Erode Safe-Haven Demand
Highlights:
- Gold’s 1%+ drop to $3,280 reflects growing optimism on U.S.-China trade talks and a stronger dollar lifting real yields.
- China’s partial tariff exemptions and Trump’s trade-talk hints spurred risk-on flows, undermining gold’s safe-haven premium.
- Key data—U.S. Q1 GDP, PCE inflation, April jobs, and Spain’s unemployment—will guide Fed expectations and gold’s next move.
Overview:
Gold plunged more than 1% to settle around $3,280 per ounce, snapping a recent rally as signs of thawing U.S.-China trade tensions and a firmer dollar undermined its allure as a safe-haven asset. Over the past week, President Trump signaled a potential softening in his tariff stance, noting that preliminary discussions with Chinese counterparts have begun—even as Beijing officially denied any formal negotiations. This ambiguity briefly buoyed market sentiment, prompting some investors to liquidate gold positions in favor of risk assets.
Simultaneously, China selectively exempted a tranche of U.S. products from its punitive 125% tariffs, offering further signs of de-escalation. Yet by clarifying that duties “won’t be 0%,” both sides maintained leverage, keeping trade policy squarely in focus. The U.S. dollar’s rebound—driven by these developments and by renewed bets on Fed hawkishness—added pressure on gold, making it more expensive for holders of other currencies and boosting real yields.
Traders are now bracing for a heavy slate of economic releases that could sway gold’s next move. The first estimate of U.S. Q1 GDP, March’s personal-consumption expenditures inflation data, and April employment figures will offer fresh insight into growth and interest-rate trajectories. In Europe, the Spanish unemployment-rate report will be closely watched for signs of economic resilience.
On the technical front, spot gold finds near-term support at $3,255 and faces resistance around $3,310, while India’s MCX contract is backed by ₹94,500 with ceilings near ₹95,500. A tactical sell-on-rally approach—shorting around $3,295 with a stop above $3,310 and targeting $3,265—could capture further downsides if data reinforce a stronger dollar and diminished haven flows.
Trading Strategy
- Action: Selling around $3290, targeting $3265; place a stop-loss above $3315 to protect against a renewed breakout.