Gold Retreats Below $3,300 on Dimmed Trade Hopes, Firmer Dollar

Gold prices took a sharp dive below the $3,300 threshold, shedding over 1.60% to trade at $3,294, as fading hopes for a US-China trade resolution bolstered the US Dollar. Despite a dip in US Treasury yields and a slightly softer US Dollar Index (DXY), which edged up 0.23% to 99.51, gold failed to capitalize on these typically supportive conditions. Market sentiment soured after initial optimism about China potentially exempting some US goods from tariffs was quashed by President Donald Trump’s insistence that tariffs would remain unless China offers concessions, leaving investors caught in a volatile risk-on, risk-off tug-of-war.

The broader market mood was further dampened by deteriorating US Consumer Sentiment, which fell to 52.2 in April, marking its fourth-lowest reading since the late 1970s, according to the University of Michigan. Inflation expectations also surged, with one-year forecasts climbing from 5% to 6.5% and five-year outlooks rising from 4.1% to 4.4%, adding pressure on risk assets like gold. As traders brace for a data-heavy week featuring the US JOLTS report, Q1 2025 GDP, ISM Manufacturing PMI, and April Nonfarm Payrolls, the Federal Reserve’s next moves remain in focus. Market expectations point to a 92% chance of unchanged interest rates at the upcoming meeting, with the fed funds rate projected to ease to 3.45% by year-end, implying 86 basis points of cuts.

Gold’s technical outlook remains bullish but precarious, with prices slipping due to waning buyer momentum, as indicated by a fading Relative Strength Index. If selling pressure persists, gold could test support at $3,250, with further declines potentially reaching the April 3 peak of $3,167 or the 50-day Simple Moving Average at $3,041. Conversely, a recovery above $3,300 could target the April 22 high of $3,386, with resistance at $3,400 and beyond. As trade tensions and upcoming economic data continue to drive market volatility, gold’s path hinges on the Dollar’s strength and the Fed’s response to mounting economic uncertainties.