Gold prices struggled to maintain momentum following a strong recovery the previous day, as sellers emerged during the Asian session on Friday. After reaching a low of $3,120, the precious metal showed resilience but faces headwinds due to various market factors.
On Thursday, gold prices posted a significant bounce off of their most recent low—gold’s lowest price since April 10. This recovery, though, has found resistance near the 200-period Simple Moving Average (SMA) on the four-hour chart. It is true that gold produced a bullish recovery move as analysts highlight, but the last few market events have kept it from upward strength.
That being said, the recent release of softer US inflation figures has created chatter around a possible earlier-than-expected series of rate cuts from the Federal Reserve. Such cuts might have persuasive enough impact to further lower gold prices. Historically, when interest rates decline, non-yielding assets like gold become more appealing to investors. The US-China trade truce extends for only 90 days. This deal has produced a more stable global market narrative, which has led demand for gold as a safe haven to weaken.
Even though these factors have offered a huge amount of relief to global markets, they have combined to form a nasty storm for gold prices. Without question, the truce is a major headwind for gold. It reduces the metal’s overall appeal at a time when the geopolitical climate is generally more favorable.
“USD/JPY recovers toward 145.50 amid Japan’s weaker Q1 GDP print.”
As the day progressed, gold prices attracted some selling interest, with traders closely monitoring developments that could influence their next moves. Macroeconomic indicators and ongoing geopolitical concerns continue to play a heavy role in shaping market sentiment. Consequently, gold prices are at a make-or-break point.