Gold prices experienced a modest bounce from the $3,120 area, the lowest since April 10, due to improving global risk sentiment and a slight dip in the US Dollar. However, a substantial recovery remains unlikely due to optimism from the de-escalation of the US-China trade war.

Traders have reduced expectations for aggressive Federal Reserve policy easing as recession fears ease, leading to higher US Treasury yields, supporting the US Dollar and limiting Gold’s gains. The US Producer Price Index and Jerome Powell’s speech are anticipated for further direction on gold trades.

Gold Demand Dynamics

Though demand for Gold increases as a safe haven, optimism in US-Iran and US-China negotiations pressures Gold prices to one-month lows. Market participants now foresee a 50 basis points Fed rate cut this year, down from a full point previously expected, boosting 10-year US Treasury yields.

The technical outlook indicates a bearish trend after breaking below $3,200 and further Fibonacci retracement support, with potential for a decline toward $3,100. Resistance exists near $3,168-3,170, with further movement above $3,230 possibly triggering short-covering, pushing Gold toward $3,300.

Gold has been attempting to stabilise after dipping to $3,120—the weakest showing in over a month—though any sustained rally looks faint for now. That bounce, while notable on the hourly chart, came mostly on the back of softer US Dollar demand and reduced anxiety in broader financial markets. What underpinned that lighter mood was improved rhetoric around international negotiations, particularly between Washington and Beijing. The detente has cooled fears of deeper tariff disputes, which has naturally drained some of the demand from safe-haven assets like bullion.

From our view, the shift in expectations around central bank decision-making also plays a large role here. Traders now seem less convinced the Federal Reserve will move quickly on policy loosening. At one point, a full percentage point reduction was priced in for this year. Now, markets are adjusting to the idea of just 50 basis points—and that makes a considerable difference. It’s not just about the rate cuts themselves; the effect runs through bond markets, pushing up yields, which in turn offers more attractive returns in US-dollar denominated assets compared to non-yielding ones like gold.

Market Influences and Technical Indicators

It’s against this backdrop that we’ve seen 10-year Treasury yields touch higher levels again. This steady climb keeps a bid under the Dollar, which acts as a headwind for any asset priced in it. So far, that correlation has held quite well. Less need for financial protection, higher yields, and a bolstered greenback—all working in tandem to flatten the enthusiasm we might usually see for precious metals in uncertain times.

There’s also the matter of the data calendar. With the Producer Price Index due shortly, and the Federal Reserve Chair set to make remarks, we’re looking at possible market reshuffles. It’s not likely to overturn the bigger trend, but either surprise in inflation metrics or a shift in tone from Powell could realign rate cut timelines yet again. That’s where volatility may re-enter.

Technically, the bias still leans downward. The break under the $3,200 level and loss of support through the Fibonacci pivot points opened room for prices to test lower ranges. We would watch $3,100 with interest; it’s a round number and psychologically relevant. If sellers continue to press, there aren’t many firm levels between there and the next consolidation zones.

Any lift from here, particularly through the $3,168 to $3,170 region, could draw some of the shorter positions out of the market, triggering what’s effectively a short squeeze. If that occurs, we might see a run toward $3,300—but that route looks unlikely without broader catalyst support. Buyers would need not just technical momentum but also macro backing, perhaps in the form of renewed geopolitical flare-ups or reversal signals from the US central bank.

For active traders, managing exposure to directional bets in metals will rely not just on headline flows but underlying rate dynamics and bond performance as well. The clearer those signals become, the more likely we can lean into setups with confidence.

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