Gold price languishes below $3,300; last week’s swing low holds the key for bulls

Gold price meets with a fresh supply on Monday amid the US-China trade deal optimism.

A fall in China’s gold consumption and a modest USD uptick also weigh on the commodity.

Trade-related uncertainties and Fed rate cut bets warrant caution for the XAU/USD bears.

Gold price (XAU/USD) attracts fresh sellers at the start of a new week and drops to the $3,268-3,267 area, back closer to Friday's swing low, during the Asian session. Despite mixed signals from the US and China, investors remain hopeful over the potential de-escalation of trade tensions between the world's two largest economies. Apart from this, a fall in China's gold consumption in the first quarter of 2025 turned out to be a key factor subsiding demand for the traditional safe-haven bullion.

Meanwhile, the US Dollar (USD) struggles to build on last week's strong recovery gains from a multi-year low – marking its first weekly gain since March. Prospects of Fed rate cuts and ongoing geopolitical risks could cushion the Gold price. Hence, it will be prudent to wait for strong follow-through selling before positioning for any meaningful corrective decline from the all-time peak touched last Tuesday.

Daily Digest Market Movers: Gold price is pressured by receding safe-haven demand; downside seems cushioned

• China has exempted some U.S. imports from its 125% tariffs imposed earlier this month in response to the 145% US tariffs on Chinese imports. This comes on top of US President Donald Trump's reassertion that trade talks were underway with China and fuels hopes for a quick de-escalation of trade war between the world's two largest economies.

• China has yet to confirm any exemptions and denies ongoing tariff talks. Meanwhile, Trump's shifting announcements and global recession fears sustain demand for the safe-haven Gold price.

• The China Gold Association said on Monday that the country's gold consumption fell 5.96% year-on-year to 290.492 tonnes in the first quarter of 2025. Moreover, high prices continued to curb demand for gold jewelry, which slumped 26.85% year-on-year to 134.531 tonnes. Meanwhile, consumption of gold bars and coins surged 29.81% to 138.018 tonnes.

• The US Dollar preserves last week's recovery gains, though it lacks follow-through amid bets that the Federal Reserve will resume its rate-cutting cycle in June and lower borrowing costs by one full percentage point in 2025. Moreover, geopolitical risk remains in play amid the protracted Russia-Ukraine war, which limits losses for the precious metal.

• North Korea has confirmed for the first time that it has sent troops to fight in the Russia-Ukraine conflict. Trump urged Russia on Sunday to stop its attacks in Ukraine while US Secretary of State Marco Rubio said that the US might walk away from peace efforts if it does not see progress. This, in turn, warrants some caution for the XAU/USD bears.

• Investors this week will confront the release of key US macro data, including the JOLTS job openings report on Tuesday, US Personal Consumption Expenditures on Wednesday, and the non-farm payrolls (NFP) report on Friday. The data may provide more insight into the Fed's policy outlook and provide some meaningful impetus to the commodity.

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Gold price bears need to wait for some follow-through selling below $3,265-3,260 before placing fresh bets

From a technical perspective, bearish traders need to wait for acceptance below the 38.2% Fibonacci retracement level of the latest leg up from the vicinity of mid-$2,900s, or the monthly swing low before placing fresh bets. Some follow-through selling below the $3,265-3,260 immediate support will confirm a breakdown and make the Gold price vulnerable to extend its recent corrective decline from the $3,500 psychological mark, or the all-time peak. The subsequent downfall could drag the precious metal to the 50% retracement level, around the $3,225 region, en route to the $3,200 mark. A convincing break below the latter will suggest that the commodity has topped out in the near term.

On the flip side, attempted recovery back above the $3,300 mark might confront some resistance near the Asian session high, around the $3,331-3,332 region. Any further move up might still be seen as a selling opportunity and remain capped near the $3,366-3,368 supply zone. The latter should act as a key pivotal point, which if cleared decisively should allow the Gold price to reclaim the $3,400 mark. The momentum could extend further toward the $3,425-3,427 intermediate hurdle before bulls make a fresh attempt to conquer the $3,500 psychological mark.