Gold (XAU/USD) extended its intraday decline through the Asian session on Tuesday, slipping back toward the $3,300 level amid waning safe-haven demand driven by optimism over a potential de-escalation in US-China trade tensions. A renewed uptick in US Dollar (USD) buying further pressured the precious metal, though strong support around the $3,265–$3,260 zone has helped contain deeper losses for now.
Recent developments on the trade front, including China’s decision to exempt certain US imports from retaliatory tariffs and US President Donald Trump’s openness to rolling back tariffs, have bolstered market sentiment. US Treasury Secretary Scott Bessent confirmed on Monday that several top trading partners have made “very good” tariff proposals, reinforcing the view that tensions could ease. However, mixed signals persist, with China disputing Trump’s claim that trade negotiations are currently underway.
The positive shift in risk appetite has benefited the US Dollar, which tends to move inversely to Gold, a non-yielding asset priced in USD. Nonetheless, investors remain cautious amid geopolitical uncertainty and the unpredictability of US trade policy. The ongoing Russia-Ukraine conflict, compounded by North Korea’s involvement, continues to add a layer of geopolitical risk, helping to keep Gold somewhat supported.
In monetary policy, expectations for renewed rate cuts by the Federal Reserve later this year are growing. Markets are currently pricing in the likelihood of at least three rate reductions by year-end, with the first potentially arriving as early as June. These prospects could help Gold maintain a near-term floor, as lower interest rates enhance the appeal of non-yielding assets.
Technical indicators suggest the $3,290–$3,300 zone marks the 38.2% Fibonacci retracement of the recent uptrend from mid-$2,900s, acting as near-term support. A decisive break below the $3,265–$3,260 region could trigger deeper bearish momentum, potentially dragging Gold toward the $3,225 level—the 50% retracement—and further down to $3,200.
On the upside, immediate resistance lies around $3,348–$3,353, with a break above this zone opening the path toward $3,366–$3,368. Sustained bullish momentum could push prices back toward the $3,400 handle, with the next target at $3,425–$3,427. A move beyond this would bring the $3,500 psychological level back into focus.
Market participants now await fresh US economic data for further direction. Tuesday’s JOLTS Job Openings, followed by Wednesday’s Personal Consumption Expenditures (PCE) and Friday’s Nonfarm Payrolls (NFP), are likely to shape investor expectations around the Fed’s next policy steps and provide momentum for the next leg in Gold’s price action.
