Gold prices (XAU/USD) attracted fresh buyers during the Asian session on Thursday, reversing the previous day’s significant losses and halting a two-day losing streak that had brought prices down to the $3,260 area, a weekly low. The recovery came as concerns over the ongoing US-China trade tensions resurfaced, bolstered by comments from US Treasury Secretary Scott Bessent, which indicated that the trade standoff could persist longer than anticipated. This uncertainty, combined with the potential economic impact of US President Donald Trump’s tariffs, helped revive demand for gold as a safe-haven asset.
Meanwhile, the US Dollar (USD) struggled to build on its two-day recovery from a multi-year low, which further supported the upward movement in gold prices. Additionally, the prospect of more aggressive policy easing by the Federal Reserve (Fed) provided further tailwinds for gold, which offers no yield compared to other assets. Despite these factors, investors remain hopeful for a US-China trade deal, and a generally positive risk sentiment continues to offer some headwinds for gold’s price.
Gold Benefits from Safe-Haven Flows Amid Trade and Economic Uncertainty
Bessent’s remarks on Wednesday, which denied reports that the White House was considering unilaterally cutting tariffs on Chinese imports, dampened hopes for a swift resolution to the trade conflict. He emphasized that tariff reductions would need to occur mutually, reinforcing a longer-than-expected timeline for resolving the US-China trade standoff and boosting demand for gold.
The Fed’s Beige Book, released Wednesday, revealed widespread uncertainty surrounding Trump’s shifting tariff policies, which could hinder economic growth in the months ahead. The report also noted mixed consumer spending trends and signs of a cooling labor market, with employment growth stalling or slowing across several Fed districts. These indicators pointed to a bleak economic outlook, further supporting gold’s safe-haven appeal.
On the economic data front, the preliminary reading of S&P Global’s Composite PMI for April showed a slowdown in US business activity, with manufacturing expanding only modestly and the services sector showing signs of weakening demand. These figures added to the overall cautious sentiment in the market.
The US Dollar’s recovery, which had gained some traction in recent days, lost momentum as expectations grew that the Fed may resume its rate-cutting cycle in June, potentially reducing borrowing costs by at least three times by year-end. This contributed to gold’s appeal, as lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.
Despite these bullish factors, a positive risk tone, driven by easing US-China trade tensions and receding concerns over the Fed’s independence, tempered investor appetite for gold. Market participants are now awaiting key US macroeconomic data, including Jobless Claims and Durable Goods Orders, to provide short-term direction.
Key Levels for Gold Prices
From a technical perspective, gold showed resilience below the 38.2% Fibonacci retracement level of the recent rally, which began from the mid-$2,900s. Prices then rebounded but struggled near the 23.6% Fibonacci level, around $3,367-3,368, which now serves as a critical resistance point. With daily oscillators remaining in positive territory, a break above this level could allow gold to reclaim the $3,400 mark, with further gains targeting the $3,425-3,427 region. If momentum continues, bulls could push towards the $3,500 psychological mark.
On the downside, support is seen around the $3,300 level, followed by the $3,288 zone (38.2% Fibonacci) and the previous swing low near $3,260. A break below the latter would signal further weakness, with the $3,225 region (50% Fibonacci retracement) serving as the next key support level. A more significant decline below $3,200 would suggest that gold has topped out for the near term and could extend the retracement from its all-time high this week.
