Gold prices remained under pressure in early European trading on Friday, easing from Thursday’s sharp rebound that followed a dip to $3,120 — the lowest level since April 10. The retreat comes as easing global trade tensions, particularly a temporary truce between the U.S. and China, diminish demand for safe-haven assets.
The agreement between Washington and Beijing to pause new tariffs for 90 days has soothed market nerves, reducing the appeal of gold as a protective investment. However, a mix of economic and geopolitical factors may help stabilize the metal and limit further downside.
Weaker U.S. Data Weighs on Dollar, Offers Support to Gold
Disappointing U.S. economic data released Thursday bolstered expectations for additional Federal Reserve rate cuts this year. The Producer Price Index (PPI) for final demand fell 0.5% in April, marking its first monthly decline since 2023. Coupled with Tuesday’s softer Consumer Price Index (CPI) figures, the data point to easing inflation and growing pressure on the Fed to maintain a dovish stance.
These developments pushed U.S. Treasury yields lower for a second straight day and kept the dollar on the defensive — a dynamic that typically benefits non-yielding assets like gold. Retail sales data also showed a modest 0.1% increase in April, following a 1.7% revised gain in March, reinforcing concerns about a potential slowdown in U.S. economic growth.
Geopolitical Tensions Provide Underlying Support
While trade optimism weighs on bullion, persistent geopolitical tensions are helping to curb further losses. In Istanbul, negotiators from the U.S., Russia, and Ukraine have convened for the first direct peace talks in three years. However, the absence of Russian President Vladimir Putin has dampened hopes of a significant breakthrough.
Meanwhile, Israel’s ongoing military operations in Gaza have intensified, with at least 143 Palestinians reported killed since early Thursday. The mounting humanitarian toll is contributing to a climate of geopolitical uncertainty that continues to support gold’s safe-haven status.
Technical Outlook: Key Levels in Focus
From a technical standpoint, gold’s recovery from recent lows has struggled to breach resistance near the 200-period Simple Moving Average (SMA) on the four-hour chart, located around $3,252–$3,255. Momentum indicators on the daily chart remain negative, suggesting caution before confirming a bullish reversal.
A drop below the $3,200 threshold could find initial support in the $3,178–$3,177 zone. Sustained weakness may expose the metal to further declines toward the $3,120 level, with a potential extension to $3,100 and then $3,060.
Conversely, a decisive break above the $3,252–$3,255 barrier could trigger a short-covering rally, with $3,300 serving as a key pivot. A move beyond this level would likely shift momentum in favor of the bulls and open the door for further gains.
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