Gold Prices Decline as US-China Trade Deal Hopes Rise, Impacting Safe-Haven Demand
Gold prices have slipped below key support levels as optimism grows over a potential trade deal between the US and China. Risk appetite is on the rise, with reports indicating that the Trump administration is seeking to start tariff talks with Beijing. This has led to a softer stance from China, causing safe-haven demand to decrease and Gold prices to drop.
US GDP Contracts in Q1 2025
The US GDP contracted by 0.3% in the first quarter of 2025, marking its first decline since early 2022. This decline was primarily driven by a surge in imports ahead of new tariffs, along with a slowdown in consumer spending and government expenditures. The weakening economy has sparked recession fears, overshadowing positive data releases.
Looking Ahead
Despite upcoming high-impact data releases, Gold may struggle to recover significantly as long as sentiment continues to improve. Technical analysis shows that Gold prices have failed to maintain support above $3300/oz, with a potential drop to the 3200 handle. Key support at 3167 will be crucial in determining Gold’s future trajectory.
In conclusion, the growing optimism surrounding a US-China trade deal has dampened safe-haven demand for Gold, leading to a decline in prices. The contraction in US GDP and ongoing tariff developments are likely to continue influencing market sentiment. Investors should closely monitor support levels and economic indicators to make informed decisions about their finances.