- Gold struggles as investors shift focus to riskier assets amid trade optimism.
- Strong US dollar could exacerbate gold’s weakness, reducing its safe-haven appeal.
- Upcoming US economic data likely to influence gold’s short-term price movements.
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prices edged higher in early trading today, despite rising optimism that the US and China may soon bury the hatchet and reach a trade accord. That renewed optimism has been fuelling a robust rally in global equities of late, which in turn has dulled some of the appeal for safe-haven assets like gold and yen.
Indeed, we haven’t seen a new record high since gold hit $3,500 back in April, even though other precious metals like and platinum have rallied strongly.
Now, with high-level trade talks between Washington and Beijing scheduled to take place in London today—following what’s been described as a “very positive” call between Presidents Trump and Xi last week—there’s room for sentiment to improve further. Meanwhile, Friday’s better-than-expected could encourage dip buyers today, potentially putting pressure on gold prices.
In that context, a short-term correction wouldn’t be a shocker. But could we see a more significant move towards the psychologically significant $3,000 level in the coming weeks?
Could Gold Slip Further as Haven Appeal Fades?
Gold’s been struggling to reclaim the $3,400 mark, despite silver’s breakout last week to its highest level since 2012—around $36 per ounce. There’s also been some action in other precious metals, with platinum especially catching a bid thanks to tightening supply and a surge in jewellery demand as a cheaper alternative to gold.
Yet, despite being the first to make headlines with successive record highs in recent years, gold now appears to be lagging behind its shinier cousins. While the yellow metal has found some traction this morning as US wakes up, the overall lack of momentum and the improved appetite for risk suggest it might face more pressure.
Investors seem to be reallocating to riskier assets, leaving gold vulnerable to a potential deeper pullback – though, so far, we haven’t seen such a move.
A strengthening US dollar—particularly against currencies like the pound, euro, and yen—could exacerbate the weakness. These currencies outperformed during times of global trade anxiety in the last few months, so with tensions easing, the greenback may come back into favour. And a stronger dollar usually spells trouble for dollar-denominated assets like gold.
US CPI and Consumer Sentiment Could Drive the Next (LON:) Move
After last week’s barrage of economic figures, this week’s calendar is looking a little more relaxed—especially with much of Europe enjoying a public holiday today. For gold traders, attention will shift to the US on Wednesday and the University of Michigan’s survey on Friday.
Last month’s CPI came in lighter than expected at 2.3%, versus a forecast of 2.4%, and several other indicators disappointed as well, raising hopes of a rate cut from the Fed. But it was really the uncertainty around tariffs that had the most pronounced impact on the dollar.
Now, with the US and China back at the negotiating table, that uncertainty is receding. A strong inflation print this week could breathe fresh life into the dollar, putting some downward pressure on gold.
Friday’s consumer sentiment report will be closely watched too. With equity markets roaring back in recent weeks, traders will want to see whether consumer confidence is also on the up. A strong showing here could reinforce bullish dollar bets and sap demand for safe-haven assets like gold.
Gold Technicals: Vulnerable but not broken
Gold’s modest bounce this morning follows a two-day slide late last week. While we haven’t seen any screaming sell signals just yet, the failure to notch fresh highs since April’s peak certainly raises the risk of further downside—particularly if risk sentiment continues to improve.
At the moment, the $3,300 support level is just about holding. But if that gives way, things could get lively. The next real level of support doesn’t come into play until the trendline around $3,200. A decisive break could see gold drop $100 in fairly short order. Below that, the mid-May low of $3,120 will be key, and after that we’re looking at the big psychological level—$3,000.
That said, the broader trend remains bullish. So while there’s short-term downside risk, don’t write off gold just yet. Resistance to watch includes the $3,345 area—last week’s former support turned resistance. Beyond that, $3,400 is back in play, with $3,430 the next level up.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.
