Gold price recovers slightly from two-week low; still deep in the red amid positive risk tone and stronger USD

• Gold price attracts heavy selling for the third successive day amid a combination of factors.
• Signs of easing US-China tensions and a modest USD uptick weigh on the precious metal.
• Bets for aggressive Fed rate cuts should cap the USD and limit losses for the XAU/USD pair.

Gold price (XAU/USD) maintains a heavily offered tone heading into the European session, though it has managed to rebound slightly from over a two-week low, around the $3,221 touched earlier this Thursday. The recent optimism over the potential de-escalation of tensions between the US and China – the world’s two largest economies – remains supportive of a positive risk tone. Furthermore, the US Dollar (USD) advances to a two-week top and turns out to be another factor undermining demand for the safe-haven precious metal.

Meanwhile, prospects for more aggressive policy easing by the Federal Reserve (Fed), bolstered by a surprise contraction in the US GDP and signs of easing inflationary pressures, could act as a headwind for the USD. This, in turn, holds back traders from placing fresh bearish bets around the non-yielding Gold price and helps limit further losses. Investors now look forward to key US macro releases scheduled at the beginning of a new month, including the Nonfarm Payrolls (NFP) report on Friday, for some meaningful impetus.

Daily Digest Market Movers: Gold price bears retain control amid hopes for US-China tariff negotiations

• US President Donald Trump said earlier this Thursday there is a “very good probability we’ll reach a deal with China” and added that we have “potential” trade deals with India, South Korea and Japan. The comments add to the recent optimism and further boost investors’ confidence.
• The US Dollar ticks higher in reaction to Trump’s remarks and drags the safe-haven Gold price lower for the third consecutive day on Thursday. A breakdown below the $3,265-$3,260 pivotal support prompts technical selling and further contributes to the intraday decline to a two-week low.
• Automatic Data Processing (ADP) reported on Wednesday that private sector employment rose by 62K in April. This marked a notable decline from the 147K increase (revised from 155K) recorded in March and also missed the market expectation for a reading of 108,000 by a wide margin.
• Adding to this, the advance estimates by the Bureau of Economic Analysis, the US economy contracted at an annualized rate of 0.3% during the first quarter of 2025 after growing at a solid pace of 2.4% in the previous quarter. The data, in turn, revives concerns about a looming US recession.
• Meanwhile, the US Personal Consumption Expenditures (PCE) Price Index eased to the 2.3% YoY rate in March from 2.5% previous. Moreover, the core PCE Price Index, which excludes volatile food and energy prices, rose 2.6% vs. 3% in February, pointing to easing inflationary pressures.
• The dismal US macro data reaffirms bets that the Federal Reserve will resume its rate-cutting cycle in June. Traders are pricing in the possibility that the US central bank will lower borrowing costs by 100 basis points by the year-end. This should cap the USD and support the non-yielding yellow metal.
• On the geopolitical front, Kremlin spokesperson Dmitry Peskov said on Wednesday that Russia can mobilize for war on a scale comparable to the Soviet Union during World War II if necessary. Moreover, a Russian drone attack killed two civilians and injured five others in southern Ukraine.
• This might further contribute to limiting losses for the XAU/USD pair. Traders now look forward to key US macro releases – the ISM Manufacturing PMI later this Thursday and the Nonfarm Payrolls report on Friday. The data will provide cues about the Fed’s rate-cut path and influence the commodity.

Gold price seems poised to slide further; breakdown below the $3,265-3,260 pivotal support in play

From a technical perspective, the overnight breakdown below the 38.2% Fibonacci retracement level of the latest leg up from the vicinity of mid-$2,900s or the monthly swing low, and the $3,265-$3,260 was seen as a key trigger for bears. That said, oscillators on the daily chart – though they have been losing positive traction – are yet to confirm the negative outlook. Hence, it will be prudent to wait for acceptance below the 50% Fibo. level, around the $3,229-$3,228 region, before positioning for further losses. The Gold price might then accelerate the decline toward the $3,200 round figure en route to the 61.8% Fibo. level, around the $3,160 zone.

On the flip side, any attempted recovery might now confront resistance near the aforementioned support breakpoint, around the $3,260-$3,265 region. This is followed by the 38.2% Fibo. level, just ahead of the $3,300 mark, which if cleared might trigger a short-covering rally and lift the Gold price to the $3,348-$3,350 supply zone. Some follow-through buying, leading to a subsequent strength beyond the $3,367-$3,368 region (23.6% Fibo. level), will suggest that the recent corrective pullback has run its course. The XAU/USD pair might then aim to reclaim the $3,400 mark and extend the momentum further toward the $3,425-3,427 intermediate hurdle before attempting to conquer the $3,500 psychological mark.