Gold prices (XAU/USD) dropped sharply on Monday, hitting a one-week low in the $3,253–$3,252 range during the Asian session, as upbeat sentiment from the US-China trade deal undermined demand for the safe-haven metal.
Investor confidence was buoyed by encouraging signals from high-level trade talks held over the weekend in Switzerland, leading to a broader risk-on mood across markets. The news has dulled appetite for traditional safe-haven assets like gold and added downward pressure to the precious metal. Additional support for the US Dollar, driven by a resilient economic outlook and the Federal Reserve’s hawkish tone, further weighed on gold prices. The greenback held firm near a multi-week high after the Fed signaled no immediate intention to cut interest rates.
Despite the sharp drop, gold’s downside was somewhat limited as traders awaited the official joint statement from the US and China. While both sides confirmed progress in the negotiations, no commitment was made to reduce the steep mutual tariffs—145% on Chinese goods from the US, and 125% on US goods from China. This lack of clarity prompted gold to rebound about $30 from its intraday low, as cautious sentiment returned.
Markets now turn their focus to upcoming US economic data, with inflation figures and a Thursday appearance by Fed Chair Jerome Powell expected to provide further insight into the monetary policy trajectory. These events could spark renewed volatility in gold, which tends to move inversely to the dollar and interest rate expectations.
Market Movers Snapshot:
US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer confirmed a deal with China, echoed by Chinese Vice Premier He Lifeng, who hinted at a significant joint statement due Monday in Geneva.
The risk-on sentiment stemming from the trade breakthrough triggered broad selling in safe-haven assets, including gold.
The US Dollar held near a one-month high on the back of the Fed’s hawkish stance, which continues to suppress gold’s upward potential.
Meanwhile, in global geopolitics, Russian President Vladimir Putin has agreed to direct talks with Ukraine’s Volodymyr Zelenskyy, while Hamas pledged to release the last known American hostage in Gaza, adding further calm to market sentiment.
Technical Outlook:
From a charting perspective, a break and close below the $3,295–$3,290 support zone—which aligns with the 100-period EMA on the 4-hour chart and the 61.8% Fibonacci retracement—could trigger a renewed bearish wave. Hourly indicators show increasing downside momentum, and sustained selling below the session low near $3,252 may expose the monthly low at $3,200. A decisive break below this level could mark a continuation of the retracement from April’s all-time high near $3,500.
Conversely, any rebound above the $3,300 mark could see resistance around $3,317–$3,318. A strong push through this area might prompt short covering, targeting the $3,345–$3,347 zone (38.2% Fibonacci level), followed by a critical resistance near $3,365. A breakout beyond that would neutralize the bearish view and potentially reopen the path to the $3,400 level.
