During early European trading hours on Tuesday, gold prices managed to recover some ground, rising to around $3,255 per ounce. This rebound comes as investors await the release of the U.S. Consumer Price Index (CPI) data for April, expected later today. Meanwhile, optimism surrounding a new U.S.-China tariff agreement may limit further upside for gold.
The recent announcement of a temporary trade truce between the U.S. and China has improved overall market risk sentiment, putting pressure on safe-haven assets like gold. Under the agreement, both nations will reduce tariffs on each other’s goods over the next 90 days. Specifically, the U.S. will lower its additional tariffs on Chinese imports from 145% to 30%, while China will reduce its tariffs on American goods from 125% to 10%. These measures are set to last for three months.
According to a Reuters report on Tuesday, the U.S. will also reduce its minimum tariffs on Chinese imports from 120% to 54%, although a unified minimum of $100 will remain in place. Giovanni Staunovo, an analyst at UBS—a major Swiss bank and London bullion clearing house—stated: “Easing U.S.-China tensions is reducing demand for safe-haven assets such as gold.”
Gold traders are now closely watching the upcoming U.S. CPI inflation report, which could offer critical signals for the Federal Reserve’s future policy path. Expectations for April indicate a year-over-year rise of 2.4% in headline CPI and 2.8% in core CPI.
The swap market has already priced in a 25-basis-point interest rate cut by the Fed in September, with two additional cuts likely before the end of the year. Just last week, expectations suggested three cuts in total for 2025, with the earliest move possibly occurring in July.
On the geopolitical front, Indian Prime Minister Narendra Modi stated on Monday that actions against Pakistan are “on hold for now” and will depend on future behavior. At the same time, Ukrainian President Volodymyr Zelenskyy expressed readiness to meet with Russian President Vladimir Putin this week. This comes after former U.S. President Donald Trump urged Zelenskyy to “immediately” accept Putin’s proposal for peace talks in Turkey. Any signs of rising geopolitical tensions could trigger renewed safe-haven demand, potentially supporting gold prices.
Gold Maintains a Long-Term Bullish Outlook
Gold prices edged higher on the day. Based on the daily chart, the bullish outlook remains intact, with prices staying above the key 100-day Exponential Moving Average (EMA). However, as the 14-day Relative Strength Index (RSI) is positioned below the midline, short-term consolidation or a brief sell-off remains possible.
On the upside, the first key resistance level is seen at $3,347—the high from May 9. A breakout above this level could open the door to further gains toward $3,432, near the upper band of the Bollinger channel. Beyond that, the next significant resistance lies at the historic high of $3,500.
On the downside, immediate support is expected near the psychological level of $3,200. Additional support is found at $3,142, which marked the high on April 2.
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