Gold Price: In times of global uncertainty, markets often turn to the comfort of safe-haven assets, and once again, gold is proving to be a reliable choice. During Thursday’s Asian trading session, XAU/USD attracted renewed buying interest, reversing recent losses and bouncing back from the $3,260 region, its lowest point in the week.
US-China Trade Tensions Drive Safe-Haven Demand
Market sentiment was shaken after comments from US Treasury Secretary Scott Bessent. He dismissed claims that the US was planning to unilaterally reduce tariffs on Chinese imports. Instead, he emphasised that both nations need to mutually lower duties before talks can proceed. This tempered expectations of a quick resolution to the ongoing trade standoff, triggering a fresh wave of demand for the traditional safe-haven gold.
Weakening US Dollar Adds to Gold’s Shine
After a brief rebound, the US dollar has once again come under pressure. Its inability to sustain gains, coupled with rising expectations that the Federal Reserve will start cutting interest rates as early as June, has further boosted the appeal of non-yielding assets like gold. Investors now anticipate at least three rate cuts by the end of the year, a scenario that typically favours precious metals.
Slowing the US Economy Supports the Case for Gold
Economic indicators are also pointing toward a slowdown. Preliminary data from S&P Global’s Composite PMI shows that US business activity lost momentum in April. While the manufacturing sector is growing at a modest pace, the services sector appears to be losing steam. Additionally, the Federal Reserve’s Beige Book revealed growing uncertainty around trade policies and signs of a cooling labour market, factors that enhance gold’s appeal as a protective asset.
Technical Outlook: Key Levels to Watch
From a technical standpoint, gold has shown resilience near the 38.2% Fibonacci retracement level of its recent rally from the mid-$2,900s. However, it faces strong resistance near the 23.6% retracement zone around $3,367–$3,368. A successful breakout above this level could pave the way toward $3,400 and even higher to $3,425–$3,427, with a possible run at the psychological $3,500 mark.
On the downside, initial support lies at $3,300, followed by $3,288 and the recent swing low near $3,260. A drop below these levels could signal further losses, potentially taking prices toward the 50% retracement area near $3,225 or even the $3,200 threshold. A sustained decline below this level might indicate a near-term top for gold and extend the recent correction from its all-time high.
Gold Remains a Beacon in Volatile Markets
As global markets continue to navigate through uncertainty, be it from trade tensions or shifting monetary policies, gold has once again emerged as a symbol of stability. While the possibility of a US-China trade resolution and improving economic data could cap its gains, the underlying risks continue to support its role as a go-to asset in times of turmoil. Upcoming US macroeconomic reports, such as Jobless Claims and Durable Goods Orders, will be closely watched for fresh direction.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult with a certified financial advisor before making any investment decisions.
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