Gold Price Forecast: XAU/USD falls amid a possible de-escalation of US-China tensions

XAU/USD Current price: $3,394.10

• US Treasury Secretary Scott Bessent sees a de-escalation of tensions with China.
• A better mood pushed Gold sharply lower after the bright metal reached fresh record highs.
• XAU/USD edges sharply lower after reaching record highs, corrective decline may continue.

Gold hit $3,500 a troy ounce on Tuesday, yet another record high. The XAU/USD pair, however, retreated from such highs and trades in the $3,390 region in the mid-American afternoon, as the US Dollar (USD) managed to recover some of the ground lost at the beginning of the week.

The Greenback got sold off on Monday amid mounting tensions between United States (US) President Donald Trump and Federal Reserve (Fed) Chairman Jerome Powell, as the former claims Powell is not doing his job properly, and threatened to displace the central bank’s head. Trump, however, does not have the power to do so. Nevertheless, continued threats on the matter put investors in risk-off mode. Stocks plummeted at the beginning of the week alongside the Greenback, with the slides exacerbated by thin market conditions amid the Easter Holiday.

Fears cold down a bit on Tuesday, but remain in the background. Fed’s independence is under scrutiny. Additionally, tariffs hang like a Damocles’ sword. Trump's retaliatory levies are on pause, in hopes that the US could reach a better trade deal with its counterparts. The USD found additional support, and stocks accelerated their recovery following comments from US Treasury Secretary Scott Bessent, who said that the current situation with China is unsustainable and that he sees a de-escalation of the situation.

The absence of first-tier data these days maintains the focus on US political and fiscal woes. A bit more action from that front will come from S&P Global, as the company will release the preliminary estimates of the April Purchasing Managers Indexes (PMIs) for most major economies on Wednesday. The figures are a barometer of economic health, and financial markets usually react to the headlines.

XAU/USD short-term technical outlook

The daily chart for the XAU/USD pair shows it retreated sharply from its record peak and trades near its daily lows. The long upward wick could anticipate an upcoming steeper decline, although the risk-averse environment could still trigger another run of Gold buying. The same chart shows technical indicators remain within overbought levels, barely losing their upward strength. At the same time, XAU/USD keeps trading far above all its moving averages, which maintain their bullish slopes.

The near-term picture suggests the corrective decline could continue. In the 4-hour chart, XAU/USD is piercing a mildly bullish 20 Simple Moving Average (SMA), while the 100 and 200 SMAs keep heading firmly higher over $200.00 below the current level. At the same time, technical indicators head sharply lower and are currently approaching their midlines from above. Further declines, should the 20 SMA get clearly pierced, could result in the pair falling towards $3,284, the April 17 intraday low.

Support levels: 3,370.00 3,357.75 3,342.05

Resistance levels: 3,392.25 3,405.90 3,430.00