GOLD Analysis
Afternoon: Gold Nears Two-Week Low on Trade Optimism and Tepid US Growth
Highlights:
- Gold dips to $3,240/oz as China’s negotiation overture and U.S. auto-tariff relief weaken safe-haven demand.
- U.S. Q1 GDP shrinkage and flat PCE inflation temper bullion’s inflation-hedge appeal.
- Key PMIs, U.S. payrolls, and earnings data due this week will guide Fed outlook and gold positioning.
Overview:
Gold’s price action has softened around the $3,240 per ounce area, marking its second weekly loss, as markets increasingly price in an easing of U.S.–China trade tensions and digest mixed macroeconomic signals from the United States. Beijing’s announcement that it is “considering” formal trade negotiations with Washington validated President Trump’s optimistic remarks about potential agreements not only with China but also with India, Japan, and South Korea. These comments were reinforced by Mr. Trump’s executive order suspending certain tariffs on autos and auto parts—measures that collectively have bolstered sentiment in risk assets and encouraged some investors to take profits on their gold positions.
On the economic front, the U.S. Bureau of Economic Analysis reported a 0.3% annualized contraction in first-quarter GDP, a surprise downturn that underscores growing concerns about the durability of America’s expansion. Meanwhile, the Federal Reserve’s preferred inflation gauge, the PCE price index, remained unchanged in March, suggesting that inflationary pressures have plateaued. While subdued growth and stable inflation typically enhance gold’s role as an economic hedge, the offsetting impact of trade-deal optimism and a firmer U.S. dollar has muted these supportive fundamentals.
Technically, gold’s breach of the $3,265–$3,260 support zone triggered fresh selling, with the next critical floor around $3,220—coinciding with the 50% Fibonacci retracement of the recent rally. A sustained break below this level could see gold test the $3,200 round figure and the 61.8% retracement near $3,160. Conversely, any meaningful recovery would first encounter resistance at $3,275, followed by the $3,300 threshold, where short-covering might accelerate a rebound.
Looking ahead, traders are gearing up for a slate of high-impact releases that will shape both global growth expectations and Fed policy outlook. Final April Manufacturing PMIs from Germany and the Euro Zone will shed light on continental industrial momentum, while U.S. data—Average Hourly Earnings, Nonfarm Employment Change, and the Unemployment Rate—will provide fresh insight into labor-market health and wage trends. Collectively, these reports will recalibrate forecasts for U.S. interest rates and, by extension, gold’s attractiveness relative to yield-bearing assets.
Trading Strategy
- Action: Selling on 3265-60$, targeting $3200-05$; place a stop-loss above $3300 to protect against a renewed breakout.