Gold – Focus on the Specific Details of US/China Trade TalksGold prices rallied 0.6% on Friday to close at 3325 as traders rushed to obtain some safe haven protection against the uncertainty of whether the outcome of trade negotiations between the US and China, taking place in Geneva over the weekend, may yield positive or negative results which could have significantly impact all markets on the Monday open.
Roll forward 2 days and Gold has fallen to a low of 3259 (at time of writing) in early Monday trading as traders digest and then react to both the US and China reporting ‘substantial progress’ in their talks. This news seems to have initially boosted risk sentiment and reduced the need for traders to own Gold as a hedge, at least for now anyway.
While light on detail, initial reports indicate that the trade teams from the world’s two biggest economies have agreed to create a mechanism for further talks. US Treasury Secretary Bessant and Trade representative Greer are expected to hold a press briefing later this morning to share more specific details, so there is room for disappointment, which could see Gold rally back to higher levels, or more progress than anticipated by markets, which may see Gold extend its sell off down to potential key technical support levels.
Technical Update: Decision Making Progress Develops
On April 24th 2025, we published a commentary on Gold, highlighting its inability to break above the psychological round number resistance at 3500, from which a sell-off was developing. Please look back at our timeline to read our thoughts at that time.
The setback from these all-time highs at 3500 did extend further, and tests of 3228, which was equal to the 50% Fibonacci retracement (April 7th to April 22nd 2025 price strength) did materialise.
After initially seeing the strong bounce from 3228 last week, it appears that traders may be focusing on this level as a possible important support over coming sessions.
What is the Current Situation for Gold?
While much will depend on future price trends and market sentiment, it could be suggested that recent price activity in Gold since the April 22nd session all-time high, has established both upper and lower extremes of a developing sideways range, between 3228 and 3500.
This type of sideways activity represents something of a ‘balance’ between both buyers and sellers of Gold. Price strength has been met by selling pressure at 3500, while buyers have materialised around 3228, the 50% retracement level.
However, it could even be suggested after the price weakness from last Tuesday’s 3435 session high, immediate resistance could now be lowered to this 3435 level.
Predicting the direction of an eventual range breakout is difficult, and we must wait for either a confirmed closing break below 3228, or above 3435 to suggest the next possible direction of a more sustained phase of price movement. Until such a breakout materialises, extension of the choppy sideways activity, as seen recently, could continue.
Upside Focus: If potential is to turn towards further attempts to extend price strength, it may well be suggested by closes above last week’s 3435 high. While breaks of these 3435 extremes won’t be a guarantee of price strength, it might lead to retests of the psychological 3500 high, even towards 3570, which is the 300% Fibonacci extension of the October 31st to November 14th 2024 decline.
Downside Focus: To the downside, traders may well continue to focus on the 3228 Fibonacci retracement level as support, with closing breaks perhaps pointing to risks for further price declines. Such moves may then lead to weakness towards 3164, which is the lower 61.8% retracement level.
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