Gold Daily | Gold Price Drops 1% Amid US-China Trade Optimism; Fed Decision Looms

【Latest Gold Price and Recent Trends】

Gold price dropped over 1%, now at $3,378 per ounce, due to optimism around US-China trade talks impacting demand for this safe-haven asset. Recently, gold faced selling pressure, markedly retreating from a two-week high of $3,435.

【Technical Analysis】

Gold price encountered resistance near channel support (now resistance), sharply falling towards the first support level around the psychological mark of $3,350 per ounce. The 21-day simple moving average at $3,283 per ounce will serve as the next defense line for gold buyers. A deeper decline will challenge the May 2 low of $3,223 per ounce. Nonetheless, the 14-day relative strength index (RSI) remains above the mid-line, close to 61.50, indicating any pullback might be seen as buying opportunities. For upward movement, gold needs to firmly stand above the two-week high of $3,435 per ounce to continue climbing. The next upward target is around channel support (now resistance) at $3,494 per ounce, where historical highs will also be under scrutiny.

【Market Sentiment and Economic Background】

Optimism over upcoming US-China trade talks and profit-taking ahead of a Federal Reserve policy announcement have driven recent gold price movements. Reports suggest US Treasury Secretary Scott Besant and chief trade negotiator Jamison Greer will meet China's lead economic official, He Lifeng, in Switzerland to discuss tariffs. This meeting aims to ease the trade war between the world's two largest economies. Meanwhile, traders are adjusting positions to brace for the Fed's key decision and Chair Jerome Powell's press conference. Markets widely expect no rate change this meeting. Powell's wording at the conference will be crucial, potentially altering expectations for rate cuts this year. The FedWatch tool indicates only a 30% chance of a rate cut in June. Strong US labor market data and business PMI have reduced bets on a June rate cut, with Goldman Sachs and Barclays delaying their forecasts to July.

【Analyst Opinions】

Analyst Zain Vawda from MarketPulse suggests that if tensions between India and Pakistan escalate, gold could gain support from increased safe-haven demand. Physical gold data shows China's gold reserves increased to 73.77 million ounces by end-April, marking the sixth consecutive month of increase. If the Fed signals rate cuts in June and expresses concerns about economic outlook, gold prices could experience a new round of increases.