Gold Prices Slide 2.2% as Safe-Haven Appeal Wanes: US-China Deal, Trump’s Gulf Trip, and Trade Deal Announcements in Focus
Today, gold prices have slipped around 2.2% to trade at $3176 at the time of writing. It appears that safe-haven appeal is finally waning due to a combination of factors.
US-China Deal:
The talks over the weekend between the global powers were one of the first dominos which have kept gold prices under pressure. Today, China’s Commerce Ministry announced a pause on the unreliable entity list for 17 US firms and halted export controls on 28 entities for 90 days starting May 14. This is just another step toward easing tensions.
President Trump’s Gulf Trip:
US President Donald Trump is on a four-day investment drive to the Gulf states which has been impressive so far. Deals announced with Saudi Arabia include a $600 billion investment commitment in the US on top of arms sales to the Gulf state of around $142 billion. Qatar has also announced plans to invest in the US, starting with a commitment to buying around 160 Boeing jets. These announcements, while not trade deals exactly, will inject optimism into financial markets and weigh on haven demand.
Trade Deal Announcements Move Closer:
According to a Fox Reporter, trade-tariff deals with Japan and South Korea are said to be “close,” according to Wall Street sources close to the White House. This would be another major step in the right direction on the trade deal front and could add to gold’s woes if it comes to fruition.
Russia-Ukraine Conflict:
There has been growing chatter about an Istanbul meeting tomorrow regarding the Russia-Ukraine conflict. Pressure is growing for Putin to meet with Zelenskyy, but the Kremlin has not confirmed if Putin will attend. Positive developments from the proposed talks could strengthen the retreat from havens and weigh on gold prices.
Market Sentiment and Technical Analysis:
Current client sentiment shows that 73% of traders are net-long on gold, but a contrarian view suggests the precious metal may continue to decline. From a technical standpoint, gold has broken through a key support area at 3200 and has shifted momentum from bullish to bearish. Key support levels to watch are at 3170, 3150, and 3125, while resistance may be found at 3195-3200, 3233, and 3245.
In conclusion, with geopolitical developments and trade deal announcements in focus, gold prices are experiencing downward pressure as safe-haven appeal diminishes. Traders should monitor key support and resistance levels for potential trading opportunities in the current market environment.