Gold partial recovers intraday losses as markets reduce tariff hedge on US trade rumors
- Gold price flirts with a near 1% loss on whit traders reducing their tariff hedge trade in Gold.
- US Treasury Secretary Bessent commented on television over the weekend that several trade deals are ongoing with several Asian countries.
- Gold eases as traders start to believe tariff risk has peaked from now on.
Gold price (XAU/USD) is dipping under selling pressure from traders, sending the Bullion price to $3,295 at the time of writing on Monday. The correction comes after a television interview at ABC with United States (US) Treasury Secretary Scott Bessent on Sunday, who mentioned that several big deals were on the table with Asian countries. “If there are 180 countries, there are 18 important trading partners, let's put China to the side, because that's a special negotiation, there's 17 important trading partners, and we have a process in place” said Bessent, and added “some of those are moving along very well, especially with the Asian countries.”
Additionally, US Agriculture Secretary Brooke Rollins said on Sunday that the Trump administration is having daily conversations with China over tariffs, per Reuters. Rollins noted ongoing talks between the two nations and that trade deals with other nations were “very close.” It appears that more easing in the tariff story could be underway, which takes the wind out of the Gold surge.
However, Gold’s price decline could be limited as the Chinese Foreign Ministry reiterated on Monday that President Xi Jinping and US President Donald Trump did not have a call recently. “The US and China have not conducted negotiations or consultations on tariffs,” the Ministry noted.
Looking ahead to the rest of the week, the focal point will be on the April Nonfarm Payrolls (NFP) release on Friday. The US data as a whole will draw much more attention as a barometer to assess the next step of the Federal Reserve (Fed), with the Federal Open Market Committee (FOMC) delivering its next interest rate decision on May 7. The US data last week already started to show signs of a shift, with, for example, Durable Goods revealing a substantial change in consumer sentiment.
Daily digest market movers: Market consolidation
- Toubani Resources, an African Gold miner capitalised at $61 million on the Australian Securities Exchange (ASX), is trading up after securing commitments for a hefty $160 million debt package in a joint venture alongside a family office, Financial Review reports.
- Thailand’s bond market is on course for its best monthly inflows in more than three years, helped by interest-rate-cut bets and a stronger baht due to surging Gold prices, Bloomberg reports.
- China is stepping up scrutiny of Hong Kong billionaire Li Ka-shing’s plans to sell its Panama ports to a BlackRock Inc.-backed group, while US President Donald Trump sought preferential treatment for US ships in the waterway, adding to uncertainty over whether the blockbuster deal will proceed.
Gold Price Technical Analysis: Difficult to read
Although Bullion is softening again this Monday, traders and analysts are still calling out that more upside is possible for the precious metal. Despite several trade deals being on the table and negotiations underway, US President Trump mentioned on Friday that a delay on the exemption of tariffs is not being discussed at this moment. Meanwhile, the rhetoric between China and the US is not showing signs of actual talks taking place after Chinese retailer Shein lifted its prices for the US markets by more than 100% to pass on the tariff import costs too the US customer.
The daily Pivot Point at $3,318 is the first hurdle that needs to be recovered this Monday. From there, it is quite a stretch to $3,424 for hitting the R1 resistance. The all-time high at $3,500 will be a firm cap on the upside, which makes the R2 resistance at $3,529 a near-implausible level to reach this Monday.
On the downside, the S1 support is providing a cushion at $3,266, roughly converging with last week’s low of $3,260. Further down, the technical pivotal floor near $3,245 (April 11 high) comes into play. Finally, the S2 support at $3,213 should prevent any further downturn to the pivotal level at $3,167 (April 3 high).
XAU/USD: Daily Chart
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
Author
Filip Lagaart
FXStreet
Filip Lagaart is a former sales/trader with over 15 years of financial markets expertise under its belt.
