Gold Price Faces Downward Pressure as Trade Tensions Ease
Gold’s decline continued into Wednesday with XAU/USD slipping to $3,315 after rallying to a record $3,500 on April 22, paring nearly 5 percent in ten days as US President Trump signaled more flexibility on auto tariffs and broader US–China tensions showed signs of thaw. Stocks in New York and Shanghai rallied on hopes for tariff rollbacks, and the US Dollar Index steadied near 99.2, adding to the weight on bullion.
Safe-Haven Demand Ebbs Amid US Tariff Concessions
Investors who fled to Gold at the height of US–China trade confrontation in early April are reassessing. Mr. Trump’s executive order exempting foreign-made auto parts from overlapping duties and comments from Treasury Secretary Scott Bessent about “very good” trade offers from key partners prompted a rotation back into equities. The Dow rose 0.8 percent on Tuesday and China’s CSI 300 gained over 1 percent, reducing urgency to shelter in non-yielding bullion.
Fed Rate-Cut Odds Bolster XAU/USD Floor
Despite the weaker Gold setup, bets on Federal Reserve easing are capping US Dollar strength and underpinning support for bullion around the pivotal $3,300 level. The Dallas Fed Manufacturing Index plunged to –35.8 in April from –16.3, a two-year low likened to “insanity” by participants, stoking recession jitters. With the market pricing a 57 percent chance of a September Fed rate cut and an even split for cuts before year-end, real yields remain subdued, offering Gold a backstop even as trade fears wane.
Data-Heavy Week on Tap for XAU/USD Traders
Traders will scrutinize US data on Wednesday as the ADP report on private payrolls, Q1 GDP flash reading, and the Personal Consumption Expenditures Price Index arrive, while Friday brings the April Nonfarm Payrolls and unemployment figures. An ADP miss below 130,000 new jobs or a core PCE reading under 0.2 percent could reignite Gold’s uptrend, whereas a surprise pickup in growth or inflation risks fueling Dollar gains that drive XAU/USD toward $3,250.
On-Chain and ETF Flows: Mixed Signals
Gold ETF inflows reached $225 million on April 29, the second consecutive day of positive flows, suggesting some institutional accumulation despite price weakness. Meanwhile, rising open interest in COMEX Gold futures—up 3.5 percent week-on-week to 112 million ounces—reflects heightened speculative interest. Retail demand in Shanghai and Mumbai slowed for pure Gold jewelry, with consumers pivoting to more affordable silver and platinum pieces, but physical bar and coin sales remain resilient among Asian central bank buyers, sustaining a core bid under spot.
Technical Landscape Shows Key Levels
On the daily chart, XAU/USD rests above the 38.2 percent Fibonacci retracement of the April rally at $3,290, with the 50 percent retracement at $3,225 as next major support. Resistance clusters between $3,348 and $3,366, where the 20-day moving average and April 22 peak converge. Weekly RSI sits at 48, below neutral, pointing to potential consolidation before directional conviction returns. A close below $3,290 risks opening a slide toward $3,225, while reclaiming $3,366 could invite a rally back to $3,425.
Analyst Verdict: Gold Holds on Dips, Cautiously Bullish
Faced with receding safe-haven flows but bolstered by Fed easing and ETF accumulation, XAU/USD embodies a cautious bullish bias. Traders eye dips toward $3,290–$3,275 for fresh longs, with tight stops under $3,250. The near-term outlook favors buying on weakness ahead of Friday’s NFP number. For those holding existing positions, maintaining exposure is prudent, with upside targets at $3,400 and $3,450 in the event of renewed US growth softening. Ultimately, Gold appears best positioned to rally once trade uncertainty re-emerges or data disappoints. Therefore positioning remains buy on dips until price breaches below $3,225, at which point risk-off could shift holdings to cash.
