The Gold price (XAU/USD) is currently facing renewed selling pressure, eroding part of the strong rebound witnessed on Thursday. Despite recovering from the $3,120 region — the lowest level since April 10 — the price struggles to build on this momentum during Friday’s Asian session, hovering near the 200-period Simple Moving Average (SMA) on the 4-hour chart (H4).
The recent Tandexo publication sheds light on the key aspects of this matter.
Trade Optimism Limits Safe-Haven Appeal
The recent US-China trade truce, which includes a 90-day tariff pause, has injected a sense of optimism into global markets. This risk-on sentiment is weighing on demand for safe-haven assets like gold. Positive developments in trade negotiations between the world’s two largest economies suggest progress toward a broader agreement, and the sentiment is being bolstered by simultaneous talks with India, Japan, and South Korea.
However, this optimism has not fully offset the geopolitical tensions gripping other parts of the world. For instance, Israel’s continued military operations in Gaza, ongoing Russia-Ukraine conflict discussions in Istanbul, and the absence of the Russian President in peace talks continue to pose substantial global risk factors. These tensions could help cushion any deeper declines in XAU/USD by maintaining underlying safe-haven demand.
Fed Rate Cut Bets Undermine USD
On the macroeconomic front, the US Dollar (USD) remains under pressure, providing an indirect lift to gold. Recent US economic data suggests mounting signs of disinflation, reinforcing expectations of a dovish Federal Reserve through additional interest rate cuts in 2025.
The US Producer Price Index (PPI) for April showed a 0.5% monthly drop — the first decline since 2023. This followed Tuesday’s CPI report, which indicated the lowest annual inflation rate since February 2021.
Simultaneously, Retail Sales rose just 0.1% in April, following a revised 1.7% surge in March, suggesting a slowdown in consumer spending. Together, these figures have pushed US Treasury yields lower, diminishing the opportunity cost of holding non-yielding assets like gold and suppressing USD strength. This dynamic acts as a tailwind for bullion, even amid selling pressures driven by improving trade sentiment.
Inflation Trends and Their Impact on Gold Sentiment
Recent signs of easing inflation in the US are reinforcing expectations of a looser monetary policy stance by the Federal Reserve. With both the Consumer Price Index (CPI) and Producer Price Index (PPI) showing weaker-than-expected readings, the likelihood of additional rate cuts has increased.
This environment typically favors non-yielding assets like gold, as lower interest rates reduce the opportunity cost of holding bullion. However, without a confirmed break above key resistance levels, the gold market remains in a state of cautious consolidation.
Technical Setup: Confluence of Resistance and Support
From a technical standpoint, the recovery from the over one-month low has stalled near the 200-period SMA on the H4 chart, which currently aligns around the $3,252–3,255 zone. This key resistance area coincides with still-negative oscillators on the daily timeframe, cautioning against overly bullish positioning in the short term.
For bulls to regain meaningful control, XAU/USD would need to decisively break above the $3,252–3,255 barrier. A sustained move above this zone could trigger short-covering and potentially open the door for a retest of the $3,300 level. The $3,300 mark is a critical pivot point; a firm break above it would negate the recent bearish bias and likely attract fresh buying interest, paving the way for a more sustained upward trend.
Key Support Zones to Watch
On the downside, the immediate support lies around the $3,200 mark. A break below this level could lead to further declines towards the $3,178–3,177 area, followed by a potential test of the overnight swing low near $3,120.
Continued weakness beyond this zone may open the path toward the $3,100 threshold, and possibly even the $3,060 region, where technical buyers may re-enter the market.
Weekly Outlook: Recovery Remains Fragile
Despite Thursday’s rebound, gold remains on track for a weekly loss, pressured by trade-related optimism and a lack of follow-through buying. Still, the broad macro backdrop, including weak US data, lower bond yields, and ongoing geopolitical tensions, should limit the scope of a deeper sell-off in the near term.
Conclusion: Waiting for Confirmation
The Gold price remains caught between conflicting forces: trade optimism undermining safe-haven flows, and dovish Fed expectations paired with global tensions offering support. The technical resistance at the 200-SMA on H4 stands as the critical short-term hurdle.
Until XAU/USD breaks and sustains above $3,255, the recovery lacks confirmation. At the same time, a break below $3,178 could reestablish a bearish structure, exposing the metal to further downside risks.
As such, traders and investors should watch for clear directional cues before initiating significant positions. The current price action reflects a consolidation phase, and any breakout, upward or downward, beyond the defined technical zones may set the tone for Gold’s next directional move.
