Gold declines as trade optimism reduces safe-haven demand, while a weak Dollar limits losses

On Thursday, the price of gold fell to 3,340 USD per troy ounce, partially correcting the previous day’s gains. The decline reflects growing optimism over trade agreements, which reduced demand for gold as a safe-haven asset.

Trade optimism weighs on Gold, while geopolitical risks provide support

US President Donald Trump announced the conclusion of a trade agreement with Vietnam, under which the US will remove some tariffs on Vietnamese goods in exchange for greater market access for American products. This boosted hopes for new bilateral trade deals, easing global trade tensions.

However, gold’s losses were contained by the weak US dollar, which remains under pressure due to fiscal risks and expectations of further Fed easing. Additional support came from the ADP private sector employment report, which showed an unexpected decline, the first since early 2022. The disappointing data raised concerns about the stability of the labour market and strengthened expectations of interest rate cuts.

Meanwhile, Iran’s decision to end cooperation with the IAEA added a geopolitical risk factor, which traditionally supports gold prices.

Technical analysis of XAU/USD

On the H4 chart, XAU/USD completed a downward wave to 3,250 USD. A correction towards 3,385 USD is expected today. Once the rebound is complete, another decline to 3,250 USD remains likely. A break below this level would suggest a continuation of the downtrend towards the next local target at 3,180 USD. The MACD indicator confirms the bearish scenario, with its signal line above zero and pointing firmly upwards, indicating a corrective movement before a potential resumption of the decline.

On the H1 chart, the market formed a consolidation range around 3,336 USD. An upward breakout suggests the development of a fifth growth wave towards 3,385 USD. At this level, the growth potential may be exhausted, and a subsequent decline back to 3,336 USD is likely. A break below 3,336 USD would open the way for a further drop to 3,313 USD, with the prospect of continuing towards 3,250 USD. The Stochastic oscillator confirms this view, with its signal line above 50 and heading strictly towards 80, indicating short-term upward momentum before potential reversal.

Conclusion

Gold remains under pressure due to trade optimism, but weakness in the dollar and geopolitical risks continue to provide support. Technically, a correction to 3,385 USD is expected before potential further declines to 3,250 USD and 3,180 USD. The short-term outlook favours consolidation and corrective upward movements, followed by a likely continuation of the broader downward trend.