Gold (XAU/USD) rebounded near the $3,300 mark but traded with modest intraday losses heading into the European session on Tuesday. Investor caution prevailed as US-China trade negotiations extended into a second day in London, while persistent geopolitical tensions supported demand for the safe-haven metal. Additionally, market bets on further Federal Reserve rate cuts in 2025 added underpinning to gold’s appeal.
The US Dollar struggled to build on intraday gains, remaining near its lowest level since late April amid mounting concerns over the US fiscal outlook. This dollar weakness contributed to gold’s recovery, though traders appeared hesitant to aggressively extend positions ahead of key US inflation data due Wednesday.
Market Movers and Sentiment:
Trade talks between China and the US continued, raising hopes for a resolution that softened risk sentiment and pressured safe-haven gold during Tuesday’s Asian session. However, a stronger-than-expected US Nonfarm Payrolls report last Friday tempered expectations of imminent Fed easing, bolstering the dollar and diverting some flows away from gold.
Despite this, the CME Group’s FedWatch Tool still shows a nearly 60% probability of a Fed rate cut in September, which, combined with fiscal concerns, limited the dollar’s gains and sustained support for gold.
On the geopolitical front, Russia’s large-scale missile and drone strikes on Ukraine marked an escalation of conflict, reinforcing gold’s status as a risk hedge amid sparse US economic catalysts.
Looking Ahead:
US inflation data—Consumer Price Index (CPI) and Producer Price Index (PPI)—scheduled for Wednesday and Thursday, respectively, will likely set the tone for Fed policy expectations and influence gold demand and price direction.
Technical Outlook:
Gold’s failure to sustain a move above the 200-hour Simple Moving Average (SMA) has tilted the technical outlook bearish in the short term. Negative momentum on hourly charts points to potential further declines. A decisive drop below $3,293 could open the path to $3,245 and possibly test the $3,200 area.
Conversely, resistance near the 100-hour SMA at around $3,333–$3,334 may cap downside pressure. A break above this level could trigger short-covering, driving prices toward the $3,352–$3,353 resistance zone, with further gains potentially targeting $3,377–$3,378 and even a renewed assault on the $3,400 psychological level.
