Gold prices (XAU/USD) faced selling pressure for the second consecutive day on Wednesday, extending their rejection from a fresh record high near the $3,500 mark. This decline comes amid growing optimism surrounding a potential resolution to the US-China trade dispute and signs of easing geopolitical tensions.
US President Donald Trump played a significant role in boosting market sentiment, as officials within his administration suggested a de-escalation of the ongoing tariff conflict with China, fueling hopes of a trade deal. Trump also backed off from his previous threats to dismiss Federal Reserve Chair Jerome Powell, easing investor concerns over the central bank’s independence.
Adding to the positive mood, Russian President Vladimir Putin expressed a willingness to engage in direct talks with Ukrainian President Volodymyr Zelenskyy, further supporting investor confidence and diminishing demand for gold as a safe-haven asset.
Despite a slight recovery in the US Dollar (USD) from a multi-year low, the greenback’s strength remains limited by persistent concerns about the US economy, particularly due to Trump’s inconsistent tariff policies and growing expectations that the Federal Reserve may resume its rate-cutting cycle soon. These factors have contributed to gold’s ability to hold its ground.
Looking ahead, traders are focused on the release of global flash PMIs for fresh insight into economic conditions, which could influence market sentiment and provide further direction for gold. For now, a significant correction in gold prices seems unlikely unless there is a clear break below key technical support levels, particularly around the 38.2% Fibonacci retracement near $3,289.
From a technical perspective, gold appears to be stabilizing below the 23.6% Fibonacci level of the recent rally, with further losses possible should prices fall below the $3,315 mark. However, bullish momentum remains intact, and any further upward movement could lead to a test of resistance around $3,370 and $3,400. Should gold break through these levels, it may resume its long-term upward trajectory.
