Gold (XAU/USD) is holding firm above the $3,330 level, gaining modest ground during the European session ahead of the US Consumer Price Index (CPI) release for May. The yellow metal is benefiting from cautious sentiment but faces headwinds from easing safe-haven demand after a provisional trade agreement between the US and China.
Despite Gold’s typical role as a hedge against inflation, rising CPI could strengthen the US Dollar and lift bond yields, pressuring the non-yielding asset. Investors are treading carefully as they await data that could influence the Federal Reserve’s interest rate trajectory.
US-China Trade Truce Softens Risk Appetite
Gold’s upside is also being limited following reduced geopolitical tension after the US and China agreed to a provisional trade deal following high-level negotiations in London. The deal permits the Chinese to remove restrictions on exports of rare earth minerals, which are key to US technology and defense.
While the deal has not yet been ratified by President Trump or President Xi, the more positive tone in talks has diminished the allure of traditional safe-haven assets such as Gold. A return of uncertainty or a breakdown in talks could quickly reverse this trend.
In a parallel legal development, a US federal appeals court ruled that Trump’s “Liberation Day” tariffs may remain in effect pending further judicial review, injecting some volatility back into the trade landscape.
XAU/USD Awaits Breakout Trigger
Gold is trading at around $3,330, and thus far, has been able to stay above the important $3,300 support level but with a bullish bias. Immediate resistance is found at $3,350, then the $3,375 and $3,400 levels, while the big breakout will occur at $3,500.
If it manages to move above $3,350-$3,400, getting back to test the old record highs could be possible depending on macroeconomic developments and other variables. On the downside, $3,310 (20-day SMA), $3,300, and further back at $3,291, $3,275, and $3,240 in deeper support. The RSI is flat at around 50 and is in a neutral state, indicating that there is no clear momentum.
Gold Eyes Data for Directional Clarity
The Gold market continues to trend sideways and is waiting for a clear signal from the US CPI release today. While trade tensions are currently alleviated, the direction of the inflation print will be crucial to shaping Fed policy and interest rate expectations, and ultimately the direction of Gold.
Cooler inflation means a test of support near $3,300, while a hotter-than-expected CPI could mean a break above $3,350. Until then, traders remain cautiously positioned for the next macroeconomic impact.
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