Gold hits new weekly low below $3,300 as U. S.-China trade tensions ease

Gold prices are gradually moving away from the all-time highs set on Tuesday, mainly due to the fading demand for safe haven in the market. The easing of tensions between the US and China continues to boost risk appetite, which puts pressure on XAU/USD (gold against the US dollar). However, due to the market's expectations of the Fed's interest rate cut, the dollar bulls are more cautious, and the downside of commodities seems limited.

In early European trading, the price of gold (XAU/USD) continued its steady downward trend during the day and briefly fell below the $3300 mark in the last hour. The current upbeat market sentiment has weakened the demand for safe-haven assets. Earlier, the administration of US President Donald Trump signaled that the tariff dispute with China may show signs of easing. In addition, Trump dropped his threat to fire Federal Reserve Chairman Jerome Powell, a move that has further boosted investor confidence and weighed on precious metal prices while easing geopolitical tensions.

However, Trump's rapid shift in trade policy has weakened investors' trust in his policies, which in turn has affected market confidence in the US economy. At the same time, expectations that the Fed may adopt a more accommodative policy have failed to push the dollar further from the multi-year lows hit earlier this week, which has instead provided some support for non-interest-bearing asset gold. Therefore, the market still needs to be cautious about the subsequent selling pressure before confirming that XAU/USD has effectively broken through the $3500 mark and may have a deeper decline. Traders are currently focusing on the US PMI data and Fed officials' speeches for clues on short-term market movements.

Daily Market Dynamics Summary: Gold prices continue to take profits amid optimism.

• U.S. President Donald Trump withdrew his criticism of Federal Reserve Chairman Jerome Powell and said he had no intention of firing him before the end of his term in May 2026, a move that pushed U.S. stock indexes sharply higher on Tuesday.

• The optimistic statements of Trump administration officials on the US-China trade negotiations further strengthened investor confidence and prompted some profit-taking in the recent record gold price.

• U.S. Treasury Secretary Scott Besente said the tariff dispute between the U.S. and China is expected to ease soon. Later, White House spokeswoman Carolyn Levitt told reporters that the Trump administration was laying the groundwork for a deal.

• Russian President Vladimir Putin expressed a positive attitude towards any peace initiative, and Ukrainian President Zelensky responded on Tuesday that he was ready to start dialogue in any form after the ceasefire.

• Trump's abrupt stance on trade policy has weakened market trust, leading to the failure of the dollar to continue the moderate rally in Asian equities and to provide effective support for XAU/USD.

• The market generally expects that the Fed may restart the interest rate cut cycle in June and cut borrowing costs at least three times before the end of this year. This expectation continues to benefit non-interest-bearing gold assets.

• Traders are currently watching the release of global flash PMI data to reassess the health of the global economy. Together, these data and trade-related dynamics will affect risk sentiment and provide new impetus for precious metals movements.

From a technical point of view, if the price of gold falls below the $3300 mark (I. e. 38.2 Fibo level), it may trigger more technical selling.