At the time of writing, spot gold (XAU/USD) was trading higher, approaching $3,192, after initially falling earlier in the session. The rebound comes amid reports that negotiations between Ukraine and Russia, currently taking place in Turkey, are faltering.
President Trump, speaking during a visit to the Middle East, suggested that negotiations with Iran over its nuclear program remain possible, according to CNN. He also remarked that both Syria and Yemen “deserve a chance,” signaling a potential shift toward reduced conflict in the region. These comments initially spurred a sell-off in gold, as traders interpreted them as a sign of easing geopolitical risks.
Further pressure on gold came from progress in U.S.-China trade relations. Bloomberg reported that China has suspended its ban on the export of dual-use items—goods with both military and civilian applications—to 28 American firms. The move marks a thaw in tensions between the world’s two largest economies, reducing demand for safe-haven assets such as gold.
However, geopolitical uncertainty resurfaced as Trump told reporters aboard Air Force One that peace talks in Turkey are unlikely to succeed unless he personally meets with Russian President Vladimir Putin. Ukrainian President Volodymyr Zelenskyy also appeared to dismiss the negotiations, indicating he may depart Istanbul early due to the lack of high-level Russian engagement, Bloomberg reported.
Market Dynamics: Risk Premium and Monetary Policy
Meanwhile, rising U.S. Treasury yields continued to pose a challenge for gold prices. The yield on the benchmark 10-year note climbed to 4.54% in early Thursday trading, up sharply from 4.11% at the beginning of May. Higher yields diminish the appeal of non-yielding assets like gold.
Federal Reserve Vice Chair Philip Jefferson on Wednesday reaffirmed the central bank’s readiness to respond swiftly to inflation changes, stating that uncertainties remain regarding the persistence of inflationary pressures. The Fed’s likely stance to keep interest rates elevated for an extended period is also weighing on gold’s outlook.
Hedge funds and institutional investors have begun rebalancing their gold positions in response to market volatility. First Eagle Investments, which manages a $59 billion global fund, sold some of its gold holdings in April to take advantage of discounted equities. The move helped the fund recover amid a broader market rebound, boosting returns to nearly 10% for the year. While still maintaining a bullish long-term view on gold, fund manager Matthew McLennan trimmed the metal’s allocation to avoid overconcentration, according to Bloomberg.
Technical Outlook: Key Levels in Focus
From a technical standpoint, gold remains vulnerable to further downside. Easing global tensions, improving trade conditions, and expectations of sustained high interest rates are all contributing to bearish sentiment.
The 55-day Simple Moving Average (SMA), currently near $3,130, serves as a critical support level. A daily close below this threshold could open the door for a decline toward $3,004—the March 14 high—and potentially test the psychological $3,000 level. Beyond that, the 100-day SMA at $2,971 could act as a longer-term support.
On the upside, resistance is forming at $3,167, the April 3 high, now turned into a key barrier. A break above this level could see gold retesting the $3,200 mark. Should bullish momentum persist, further resistance is seen at $3,233 (R1) and $3,289 (R2), though such moves would likely require a significant catalyst.
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