Chart of The Day – XAU – Gold

Gold prices retreated 1.12% to $3,391.56 an ounce on Wednesday, snapping a two-day advance as news of upcoming U.S.-China trade talks boosted risk appetite and dampened safe-haven demand. This pullback leaves the yellow metal more than $100 below its record high reached in April.

Trade Talks Spark Risk Rally 

U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will meet with Chinese Vice Premier He Lifeng in Switzerland this week, marking the first high-level talks since President Trump imposed sweeping tariffs against China in April. While Washington expressed optimism about “productive talks,” Beijing remained cautious, citing a proverb that actions speak louder than words. News of the talks lifted U.S. stock futures and Asian markets, with S&P 500 futures rising 0.6%.

Geopolitical Tensions Overshadowed 

Even escalating military conflict between nuclear-armed India and Pakistan failed to drive investors toward gold’s safe-haven status, as market focus remained on trade developments. Pakistan reported shooting down five Indian airplanes and taking soldiers prisoner in retaliation for Indian military strikes earlier Wednesday.

Fed Decision Looms 

The Federal Reserve is widely expected to keep interest rates unchanged at today’s meeting, despite President Trump’s repeated calls for rate cuts. Fed officials have emphasized a need to wait and see how recently implemented trade policies affect the economy. Markets currently price just a 33% probability of a rate cut in June, down from 64% a month ago.

Gold’s Impressive 2025 Run 

Despite today’s pullback, gold has surged almost 30% this year as investors sought refuge amid market volatility triggered by Trump’s aggressive trade and geopolitical policies. The precious metal’s ascent has also been supported by speculative demand in China and central bank purchases.

Gold (D1)

Gold is trading below recent highs, with bears eyeing a retest of the $3,228 level — aligned with the 30-day SMA — and potentially targeting the previous high near $3,140, coinciding with the 50-day SMA. RSI is showing hidden bearish divergence, forming lower highs while price prints higher highs. Meanwhile, MACD is on the verge of a bullish crossover, signaling possible indecision.

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