Gold prices edged higher on Tuesday, rebounding from the $3,300 level as investors weighed ongoing U.S.-China trade negotiations and escalating geopolitical risks. Despite modest intraday losses during early European trading, the precious metal remained buoyed by its appeal as a safe-haven asset.
The diplomatic talks between U.S. and Chinese officials, extended into a second day in London, have kept market participants on edge. While the discussions fuel hopes for a breakthrough between the world’s two largest economies, they also contribute to broader market uncertainty, supporting demand for gold.
Additionally, expectations that the Federal Reserve will begin cutting interest rates in 2025 have provided further support for the non-yielding metal. Market pricing from the CME FedWatch Tool suggests a nearly 60% probability of a rate cut at the Fed’s September meeting, despite recent labor market data indicating continued economic resilience.
The U.S. Dollar, meanwhile, remains subdued, hovering near its lowest level since late April. Concerns over the nation’s deteriorating fiscal position have limited the greenback’s recovery, further enhancing gold’s appeal. However, traders are showing caution ahead of key U.S. inflation data, opting to wait for clearer signals before taking significant positions.
Geopolitical Tensions and Economic Data in Focus
Markets are also reacting to intensifying geopolitical tensions. Russia launched a major aerial assault on Ukraine, deploying nearly 500 drones and missiles in what analysts describe as a significant escalation in the ongoing war. This development is likely to keep gold bears at bay in the absence of major U.S. economic releases.
In the coming days, investors will closely monitor the U.S. Consumer Price Index (CPI) and Producer Price Index (PPI), scheduled for release on Wednesday and Thursday, respectively. These inflation readings are expected to offer crucial insight into the Fed’s rate path and could drive further volatility in both the dollar and gold markets.
Technical Outlook: Resistance Seen Near $3,353
From a technical standpoint, gold faces strong resistance in the $3,352–$3,353 range. The failure to sustain momentum above the 200-hour Simple Moving Average (SMA) during Monday’s rally signals potential weakness, with short-term oscillators also suggesting downside pressure.
A break below the $3,294–$3,293 area — the previous session’s low — would likely confirm a bearish bias and expose gold to further losses toward the $3,246–$3,245 zone, last seen on May 29, with a potential slide to the $3,200 mark.
On the upside, the 100-hour SMA near $3,333 remains a key hurdle. A sustained move above that level could trigger a short-covering rally, potentially lifting gold toward $3,377–$3,378. A clear break above this region could pave the way for a renewed push toward the $3,400 psychological threshold.
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