Gold prices extended losses on Monday, falling to a fresh one-week low below $3,250, following the positive outcome of US-China trade talks. The easing of tensions and an agreement to lower tariffs between the US and China fueled a risk-on market sentiment, diminishing demand for safe-haven assets like gold.
The positive developments from the trade talks helped to ease recession fears in the US, which, combined with the Federal Reserve’s hawkish stance, lifted the US Dollar (USD) to its highest level since April 10. This further pressured gold prices, with traders now looking ahead to this week’s US inflation data and Fed Chair Jerome Powell’s remarks for further direction.
Market Moves: US-China Deal Adds to Risk-On Sentiment
The US-China trade talks concluded on a positive note over the weekend, with both sides claiming substantial progress. US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer confirmed that a deal had been struck, further boosting global market sentiment. China’s Vice Premier He Lifeng added that a joint statement would be released in Geneva on Monday, strengthening the risk-on outlook.
The US Dollar has held steady near a one-month high, supported by the Federal Reserve’s stance on interest rates. The Fed’s position that it is not considering rate cuts anytime soon has added upward pressure on the USD.
Technical Outlook: Bearish Momentum Building
From a technical standpoint, gold faces increasing bearish pressure. A breakdown below the $3,295-$3,290 region, which includes the 100-period Exponential Moving Average (EMA) and the 61.8% Fibonacci retracement of the recent uptrend, could trigger further selling. A move below $3,253-3,252 would confirm the bearish trend, potentially leading gold to test the monthly low around $3,200.
Should gold recover above $3,300, resistance is seen near the $3,317-3,318 zone, followed by $3,345-3,347, which represents the 38.2% Fibonacci retracement level. A sustained break above $3,360-3,365 would shift the bias back to the upside and could lead to a move toward the $3,400 mark.
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