Gold declines as the Dollar strengthens and trade talks progress

At the time of writing on Tuesday, Gold (XAU/USD) is trading near $3,293, extending its losses for a second straight day. The decline comes as risk-on sentiment and a stronger U.S. Dollar continue to pressure the precious metal. Investors are also reassessing the demand for safe-haven assets amid signs of progress in U.S.-EU trade relations, after President Donald Trump announced an extension of the 50% tariff deadline on the European Union to July 9.

The Greenback gained additional strength in late Asian trading after Japan’s Ministry of Finance signaled a possible reduction in bond issuance volumes. This led to a sharp drop in Japanese yields, weakening the Yen and boosting the U.S. Dollar against multiple major currencies. A stronger Dollar makes Gold more expensive for international buyers, further limiting its appeal and acting as a headwind for price recovery.

Daily Market Movers: Gold vs Silver and Platinum

• Gold is facing a relative decline in investor demand compared to its precious metal peers, as Exchange-Traded Fund (ETF) flows shift. According to Bloomberg, gold ETF inflows have turned negative this month, ending what had been the strongest start to a year since 2022. In contrast, ETFs have increased holdings in silver, platinum, and palladium, signaling a shift in preference among investors.
• The retreat in gold demand comes as risk appetite improves amid signs of progress in U.S. trade negotiations. Gold-backed ETFs have seen five consecutive weeks of outflows since peaking in mid-April at their highest level in over a year, reflecting the diminished appeal of safe-haven assets.
• Meanwhile, China’s Shandong Gold Group is planning its second U.S. Dollar bond offering in just two weeks, aiming to raise around $100 million through a perpetual bond after a successful $300 million issuance earlier this month. This move highlights ongoing investor interest in the sector, despite softening prices.
• In the mining sector, Harmony Gold Mining Co., one of South Africa’s largest gold producers, has announced a deal to acquire Australia’s MAC Copper Ltd. for approximately $1.03 billion. The acquisition will expand Harmony’s footprint in Australia and increase its exposure to copper, according to Reuters.
• Despite the current headwinds, some tailwinds remain. Investors are staying cautious as they assess ongoing risks, including the rising U.S. fiscal deficit, uncertain global trade dynamics, and escalating geopolitical tensions in the Middle East and Ukraine.

Gold Price Technical Analysis: Searching for Key Support in a Shaky Rally

Gold is facing downside pressure this week, as persistent headwinds continue to challenge the precious metal’s momentum. The recent rebound in the U.S. Dollar—following an extended period of weakness—poses a significant obstacle for Gold, particularly as optimism around U.S.-EU trade negotiations builds. These factors could limit Gold's ability to regain recent highs.

On the upside, the first hurdle is the daily Pivot Point at $3,341. A break above this level could open the path toward R1 resistance at $3,359, with R2 at $3,374 as the next key level. If bullish momentum strengthens beyond these points, Gold may aim for the $3,400 psychological level, with a possible extension to $3,440, aligned with the highs seen on May 6 and May 7.

On the downside, Gold has some significant support levels to cushion further declines. A drop below the $3,300 mark could lead to a test of S2 support at $3,275. Below that, a critical technical support lies at $3,245, which corresponds to the April 11 high and may serve as a key pivot for any potential rebound.

In summary, while upside potential remains, Gold’s path is clouded by a stronger Dollar and improving global sentiment—factors that may continue to cap gains unless a fresh catalyst emerges.