Gold Price Forecast: XAU/USD holds below $3,350 on firmer US Dollar, easing US-China trade tensions

Gold price declines to near $3,335 in Tuesday’s early Asian session.
Improved optimism over a US-China trade deal undermines the Gold price.
Fed rate cut bets might help limit the XAU/USD’s losses.

Lallalit Srijandorn FXStreet

The Gold price (XAU/USD) loses ground to around $3,335 during the early Asian session on Tuesday. The yellow metal edges lower amid a modest rebound of the US Dollar (USD) and a softening in tensions between the United States and China.

China exempted some US imports from its 125% tariffs on Friday, raising hopes that the trade war between the US and China is nearing an end, although China quickly knocked down US President Donald Trump's assertion that negotiations between the two countries were underway.

US Treasury Secretary Scott Bessent said on Monday that the US government is in contact with China but that it’s up to Beijing to take the first step in de-escalating the tariff fight with the US due to the imbalance of trade between the two nations. The easing fears of trade tension between the world’s two largest economies reduce demand for traditional safe-haven assets like gold. Additionally, a stronger Greenback added further headwinds for the precious metal.

"Comments last week from the White House have fueled optimism that a US-China trade deal may eventuate, which has caused safe-haven demand for assets such as gold to subside,” said Tim Waterer, Chief Market Analyst at KCM Trade.

On the other hand, rising expectations that the Federal Reserve (Fed) will resume its rate-cutting cycle in the June meeting could lift the non-yielding Gold price. Meanwhile, the Fed remains in blackout mode ahead of its Federal Open Market Committee (FOMC) meeting on May 7.

Traders will keep an eye on the preliminary US Q1 GDP report and April employment data this week, as it might offer some hints about the Fed's next policy decisions and the US economic outlook. The expectation for April is that the US economy will add 135,000 jobs and the Unemployment Rate will remain at 4.2%. If the reports show a weaker-than-expected outcome, this could drag the Greenback lower and boost the USD-denominated commodity price in the near term.

Gold FAQs

Why do people invest in Gold?

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Who buys the most Gold?

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

How is Gold correlated with other assets?

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

What does the price of Gold depend on?

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

BRANDED CONTENT

Finding the right broker for trading Gold is crucial, as not all brokers offer the same advantages. Explore our list of top-performing brokers to discover the best options for seamless and cost-effective Gold trading.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

GBP/USD breaches below 1.3500, two-day lows

GBP/USD faces renewed selling pressure, eroding the earlier advance and slipping back to the sub-1.3500 region on Wednesday. Cable’s loss of upside momentum follows the resurgence of the demand for the Greenback amid steady geopolitical tensions. Looking ahead, the British Pound is expected to remain under scrutiny in light of the release of UK GDP data on Thursday.

EUR/USD weakens to multi-day lows near 1.1520

EUR/USD makes a U-turn and trades with decent losses near 1.1520 following the closing bell on Wall Street on Wednesday. The US Dollar’s recovery post-US CPI data keeps the risk complex under pressure in a context where geopolitics takes centre stage once again. Moving forward, attention remains on US inflation with the release of Producer Prices alongside weekly Claims.

Gold has priced a Fed pause. The hike is still coming

July inflation landed exactly where the consensus had it, on all four lines of the release, and Gold responded by adding around 1% and holding fast near $4,400/ounce, trading at its highest since early June. A print that surprises nobody is not supposed to move a metal that far.

Ethereum Price Forecast: Fidelity plans to add staking to ETH ETF amid yield debate

Asset manager Fidelity has filed with the US Securities and Exchange Commission (SEC) to permit staking in its Ethereum (ETH) exchange-traded fund (ETF), the Fidelity Ethereum Fund (FETH), which holds over $898 million in net assets.

911 million shares freed: Why SpaceX rallied into its own supply

The most heavily trailed supply event of the year landed on August 6, and the SpaceX (SPCX) stock went up. Roughly 911.5 million shares held by insiders and early backers became eligible to trade, around 43% more than the entire float sold at the listing.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.