US/China Tariff Reductions
Gold prices have come under heavy selling pressure today amidst a rise in risk appetite in response to news of tariff reductions between the US and China. Following two days of talks over the weekend, the two sides agreed a 90-day window of tariff reductions to allow for further negotiations aimed at securing a new trade deal. The US will reduce tariffs to the baseline 10% level from 125% with China mirroring the move, though some tariffs will remain in place as they are. US treasury secretary Bessent hailed ‘significant progress’ during the talks, stoking optimism that the two sides can agree a full trade deal over the course of coming negotiations.
Risk Sentiment Improving
As well as progress on US/China trade, risk sentiment is also being bolstered by a ceasefire between India and Pakistan and news of a potential meeting between Zelensky and Putin this week for ceasefire talks. Along with risk assets, USD has been a strong beneficiary of the news with the Dollar rallying sharply today on improved growth expectations from reduced trade war risks. Against this backdrop, gold prices have suffered amidst a reduction in safe-haven flows. If current market positivity around the news continues this week, USD looks likely to gain further which should keep gold prices anchored lower.
US Inflation on Watch
Looking ahead, gold traders will also be watching incoming US inflation data tomorrow. Given the USD-positive backdrop, any upside surprise is likely to see USD trading higher, putting additional pressure on gold prices here. However, if we see any downside surprise, this could cap the current USD rally, allowing gold prices to recover some ground. However, with the US/China trade story the bigger focus for now, gold risks look skewed to the downside near-term.
Technical Views
Gold
Gold prices have turned lower again here with price now back below the 3,254.65 level. With momentum studies weakening, focus is on a deeper push with 3,164.82 and the bull channel lows the next support area to watch. The broader bull outlook remains while that level holds. Below there, however, 3,053.76 will be the next support to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.