Gold prices edged higher on Thursday, extending their modest intraday rebound from a one-month low hit earlier in the session. The precious metal found some support amid a shift in global risk sentiment and renewed safe-haven demand. However, the rebound remains limited as optimism surrounding U.S.-China trade relations and rising U.S. Treasury yields continued to weigh on bullion.
Spot gold (XAU/USD) had briefly dipped to the $3,120 level — its lowest since April 10 — before finding traction. The pullback in the U.S. dollar also helped lift gold, which typically moves inversely to the greenback. Yet, the general risk-on mood triggered by progress in trade talks between Washington and Beijing has capped the metal’s recovery.
Investors are now eyeing the upcoming U.S. Producer Price Index (PPI) data and remarks from Federal Reserve Chair Jerome Powell for further direction. Market participants remain cautious ahead of these key catalysts, which could significantly influence expectations around future monetary policy.
Trade Optimism and Higher Yields Challenge Gold’s Safe-Haven Appeal
U.S. President Donald Trump stated on Thursday that Iran had agreed to certain terms, expressing hope that an agreement could be finalized soon. He also mentioned the possibility of traveling to Turkey by Friday to attend Russia-Ukraine peace talks, further boosting investor sentiment. Trump had earlier indicated that he may directly engage with Chinese President Xi Jinping to finalize trade deal terms, fueling expectations of a near-term agreement.
These developments have helped ease fears of a global economic slowdown, thereby reducing demand for traditional safe-haven assets like gold. At the same time, shifting expectations regarding the Federal Reserve’s rate cuts have driven U.S. Treasury yields to their highest level in a month. The benchmark 10-year yield surged as traders now expect just 50 basis points of rate cuts this year, down from over 100 basis points priced in last month.
Fed Vice Chair Philip Jefferson noted that announced tariffs and uncertainties surrounding U.S. trade policy may complicate progress on inflation. Still, he acknowledged that recent inflation data suggest movement toward the Fed’s 2% target and that current policy is appropriately positioned to respond to evolving economic conditions.
Chicago Fed President Austan Goolsbee pointed to lagging indicators in the latest inflation report and emphasized the need for patience and clearer data signals. Meanwhile, San Francisco Fed President Mary Daly said the U.S. economy and labor market remain strong, and inflation is falling. Daly added that the Fed is in a position to wait before making further moves, especially amid lingering uncertainties.
Despite a modest rebound in gold, traders appear hesitant to make aggressive bets ahead of the North American session, when the PPI data and Powell’s speech are due. These events are expected to provide critical clues on the path of interest rates and could drive both the dollar and gold in the near term.
Geopolitical Tensions Persist, But Provide Limited Support for Gold
Ukrainian President Volodymyr Zelensky confirmed his attendance at Thursday’s Russia-Ukraine peace talks in Istanbul. However, the Kremlin announced that Russian President Vladimir Putin would not attend. Separately, Israeli forces intercepted a missile launched from Yemen, and ongoing airstrikes in Gaza on Wednesday reportedly killed up to 80 people, intensifying regional conflict. Nonetheless, these geopolitical risks have provided only marginal support to gold prices.
Rebound Faces Resistance as Downside Risks Remain
From a technical perspective, Wednesday’s break below the $3,200 mark and the 61.8% Fibonacci retracement level of April’s rally has sparked renewed bearish sentiment. Oscillators on the daily chart have begun to gain negative traction, suggesting further downside potential.
Immediate support is seen in the $3,135–$3,133 range. A sustained break below this area could open the door to a retest of the $3,100 psychological level, with the next key support around $3,060.
On the upside, any move toward the $3,168–$3,170 region — representing the 61.8% Fibonacci level — is likely to encounter resistance, followed by a stronger barrier at $3,200. Should bulls manage to push prices above $3,230 (the 50% retracement level), it could trigger a wave of short-covering, lifting gold toward $3,265 and possibly the $3,300 handle, marking the 38.2% Fibonacci level.
In summary, while gold has managed to recover slightly from recent lows, the upside appears capped in the near term. Market participants await the latest U.S. inflation data and central bank commentary for a clearer direction on monetary policy and the broader economic outlook.
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