GOLD Analysis
Afternoon: Gold Retreats to $3,320 on Trade Optimism and Fed Caution
Highlights
- Trade optimism from upcoming US–China meetings and the new US–UK pact curbs gold’s safe-haven demand, driving prices toward $3,320/oz.
- Fed’s hold-and-warn policy: Staying on hold while cautioning on inflation and unemployment, with no preemptive rate cuts, weighs on bullion.
- Key catalysts ahead include Italian Industrial Production and FOMC speeches, which will inform the balance of growth, inflation, and monetary policy.
Overview:
Gold prices gave back recent gains to trade around $3,325 per ounce as renewed optimism on the US–China trade front dampened the metal’s safe-haven allure. Officials from Washington and Beijing are slated to meet this weekend, reviving hopes for substantive progress in resolving tariff disputes that have disrupted global supply chains and sparked market volatility. Adding to the positive trade sentiment was the signing of a new US–UK trade agreement, which eased broader concerns over escalating protectionism and bolstered risk appetite across asset classes.
Counterbalancing these developments, the Federal Reserve maintained its benchmark interest rate at current levels in its latest policy decision, as widely anticipated. In the accompanying statement, and in remarks delivered by Chair Jerome Powell, the Fed highlighted mounting risks of both elevated inflation and rising unemployment, underscoring a deliberately cautious stance toward future rate moves. Powell explicitly ruled out any preemptive rate cuts to offset potential economic fallout from trade tensions, signaling that monetary policy will remain data-dependent rather than reactionary.
With trade-induced uncertainty receding slightly and policy rates on hold, gold’s non-yielding characteristic loses some of its shine. The market’s focus now shifts to a handful of key economic releases that stand to influence the Fed’s next steps and, by extension, gold demand. From the Euro Zone, Italian Industrial Production figures will shed light on the region’s manufacturing momentum, while speeches from FOMC members in the United States will provide insight into internal Fed deliberations on the balance between containing inflation and safeguarding employment. Any indication that the Fed is preparing to pivot sooner than anticipated could reinvigorate gold’s safe-haven bid, whereas a reaffirmed commitment to higher-for-longer rates may keep metal prices under pressure.
Technical and Trade Action:
On the technical front, gold’s immediate support is anchored near $3,270, with resistance overhead at $3,330. Given the prevailing volatility, a tactical “sell on rallies” approach—initiating shorts around $3,350, targeting $3,260, and enforcing a strict stop-loss above $3,390—aligns with both the fundamental backdrop and technical structure.