Gold Price Forecast: XAU/USD trades with caution as US-China trade talks loom
- Gold price extends losing streak into early Monday, awaits US-China trade talks.
- The US Dollar reverses Nonfarm Payrolls-led gains, bracing for May CPI inflation.
- Gold price turns south after facing rejection at the key daily resistance at $3,377.
- Gold buyers stay hopeful until the 21-day SMA and RSI midline are defended.
Gold price is battling the $3,300 threshold early Monday amid a bearish start to a critical week. Traders eagerly await the US-China trade talks on Monday and Wednesday’s US consumer inflation data for a fresh trading impetus in Gold price.
Gold price eyes US-China trade talks after NFP beat
Gold price is trading on thin ice even as the US Dollar (USD) loses ground following a steep advance led by the above forecasts US Nonfarm Payrolls (NFP) data on Friday.
The headline NFP data showed that the US economy added 139,000 jobs in May after reporting a revised 147,000 job gain in April, beating estimates of a 130,000 print.
Strong US employment data eased expectations of more than two interest rate cuts by the US Federal Reserve (Fed) this year, justifying the central bank’s prudent approach while lifting the USD at the expense of the Gold price.
In Monday’s trading so far, the Greenback is feeling the angst of the worsening riots in Los Angeles (LA) over immigration issues.
According to CNN News, “immigration authorities and demonstrators have clashed for three days in the LA area, with unrest beginning Friday after dozens of people were detained by federal immigration agents across different locations.”
Intensifying the fragile situation, US President Donald Trump ordered the deployment of 2,000 National Guard troops to quell the protests, overriding California Governor Gavin Newsom’s objections in a rare move.
Additionally, USD markets stay unnerved ahead of the much-awaited US-China trade talks due later in the day.
US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer will meet with China’s Vice Premier He Lifeng in the United Kingdom (UK) on Monday for economic and trade consultations.
Traders also resort to adjusting their USD positions ahead of the key US Consumer Price Index (CPI) data slated for release on Wednesday. The ongoing spat between Trump and Space X founder Elon Musk also remains a headwind for the buck.
Looking ahead, further optimism on the US-China trade front could fuel a fresh leg down in Gold price. However, the downside could remain limited amid US political and civil concerns while the Russia-Ukraine geopolitical escalation could also remain supportive of the traditional safe-haven Gold price.
China’s disinflation and widening trade surplus data have little to no impact on the bright metal, as yet. China is the world’s top Gold consumer.
Gold price technical analysis: Daily chart
According to the short-term technical outlook, Gold price’s bullish bias remains in place.
Buyers continue to defend the confluence of the 21-day Simple Moving Average (SMA) and the 38.2% Fibonacci Retracement (Fibo) level of the April record rally at $3,297.
Meanwhile, the 14-day Relative Strength Index (RSI) is holding above the midline, adding credence to the bullish potential.
Gold sellers need a daily candlestick closing below the abovementioned strong support at $3,297 to challenge the 50-day SMA cap at $3,262.
The last line of defense for buyers is aligned at $3,232, the 50% Fibo level of the same ascent.
On the flip side, Gold buyers will likely find strong offers at the $3,350 psychological level if the rebound gathers strength.
The next resistance is spotted at the 23.6% Fibo resistance at $3,377, above which the May high of $3,439 could be threatened.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
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Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
