Gold price rebounds from the $3,300 area, but modest US Dollar strength may limit further gains

Gold price (XAU/USD) recovers from near the $3,300 level but holds modest intraday losses ahead of the European session on Tuesday. Ongoing US-China trade negotiations in London and persistent geopolitical tensions continue to support demand for the safe-haven metal. Additionally, growing expectations of further Federal Reserve rate cuts in 2025 provide a tailwind for non-yielding gold.

At the same time, the US Dollar (USD) struggles to gain traction and remains range-bound near its lowest level since April 22, weighed down by mounting concerns over the US fiscal outlook. This lends additional support to gold’s intraday rebound. However, with traders awaiting key US consumer inflation data, caution prevails, limiting aggressive bullish positioning in the XAU/USD pair following its bounce from a one-week low.

Daily Market Movers Digest: Gold Price Pressured by Risk Appetite, Eyes Key Inflation Data

• Gold price (XAU/USD) faces selling pressure in the Asian session on Tuesday as traders respond to renewed optimism surrounding US-China trade negotiations. Talks between officials from the world’s two largest economies were extended into a second day in London, boosting risk sentiment and prompting a shift away from safe-haven assets like gold.
• Adding to the downside pressure, Friday’s stronger-than-expected US Nonfarm Payrolls (NFP) report has tempered expectations for imminent interest rate cuts by the Federal Reserve. This has helped the US Dollar regain some ground, further weighing on demand for the non-yielding yellow metal.
• Still, the FedWatch Tool from CME Group shows markets continue to price in nearly a 60% probability of a rate cut at the Fed’s September meeting. Persistent concerns over the United States’ deteriorating fiscal outlook have also prevented the USD from capitalizing fully on its recent gains, offering some cushion for gold prices.
• Meanwhile, escalating geopolitical tensions may limit gold’s downside. Russia launched a large-scale airstrike on Ukraine, deploying nearly 500 drones and missiles, marking a significant intensification of the ongoing conflict. This backdrop could keep gold supported in the absence of high-impact US economic data early in the week.
• Traders now await critical US inflation data, with the Consumer Price Index (CPI) due Wednesday and the Producer Price Index (PPI) on Thursday. These reports are expected to provide clearer insight into the Federal Reserve’s policy trajectory and may serve as key drivers for USD demand and gold price direction.

Technical Outlook: Resistance Capping Gold, Downside Risks Remain

From a technical standpoint, gold’s failure to sustain above the 200-hour Simple Moving Average (SMA) on Monday reinforces a bearish short-term bias. Momentum indicators on the hourly charts are gaining downside traction, suggesting scope for additional intraday losses.

A decisive move below the $3,294–$3,293 area, the overnight swing low, would confirm the bearish setup and open the door for a decline toward the May 29 low near $3,246–$3,245. Further downside could expose the psychologically important $3,200 level.

On the upside, initial resistance lies near the 100-hour SMA, currently around the $3,333–$3,334 zone. A break above this barrier could trigger short-covering, lifting gold towards the $3,352–$3,353 resistance area. Continued strength beyond this zone could see the metal target the $3,377–$3,378 region, with a potential push toward the key $3,400 round number if bullish momentum persists.