Gold prices (XAU/USD) retreated to around $3,335 during the early Asian session on Tuesday, pressured by a modest rebound in the US Dollar and easing tensions between the United States and China.
The yellow metal edged lower after China announced on Friday that it would exempt certain US imports from its 125% tariffs, sparking hopes that the prolonged trade war between the two economic giants might be nearing resolution. However, optimism was tempered after Beijing swiftly dismissed US President Donald Trump’s claims that negotiations were actively progressing.
US Treasury Secretary Scott Bessent confirmed on Monday that while communication lines remain open, it is incumbent on China to take the first steps toward de-escalating the tariff conflict, citing the significant trade imbalance between the two nations. The diminishing fears surrounding trade tensions have dampened demand for traditional safe-haven assets like gold, while the strengthening Greenback further weighed on the metal.
“Comments last week from the White House have fueled optimism that a US-China trade deal may eventuate, which has caused safe-haven demand for assets such as gold to subside,” noted Tim Waterer, Chief Market Analyst at KCM Trade.
Nonetheless, rising expectations that the Federal Reserve may resume its rate-cutting cycle at the June meeting could lend support to non-yielding assets like gold. For now, the Fed remains in a blackout period ahead of its Federal Open Market Committee (FOMC) meeting scheduled for May 7.
Market participants will closely watch the upcoming preliminary US Q1 GDP report and April employment data this week, both of which could influence the Fed’s next policy moves and shape the broader economic outlook. Expectations for April point to an addition of 135,000 jobs, with the unemployment rate holding steady at 4.2%. A weaker-than-anticipated performance could pressure the US Dollar and potentially boost gold prices in the near term.
