Gold News: Price Sinks Into Support Zone at $3228–$3164, Bears Gain Momentum

Gold Prices Slide as Trade Optimism and China Holiday Sap Demand

Gold fell to a two-week low on Thursday, driven by revived risk appetite on trade deal hopes, thin liquidity from China’s holiday break, and anticipation around U.S. nonfarm payrolls data. The metal tested key support at $3228.38 to $3164.23, and technical signals suggest that a failure at this level could lead to a deeper retracement toward the 50-day moving average near $3080.45.

At 16:05 GMT, XAU/USD is trading $3212.68, down $75.48 or -$2.30%.

China Absence and Trade Hopes Weigh on Bullion

Chinese markets remained shut for the Labor Day holiday through May 5, sapping liquidity in one of gold’s largest physical demand centers. TD Securities noted gold was caught in a “liquidity vacuum” from the absence of Chinese trading.

Adding pressure, risk-on sentiment returned to broader markets after comments from President Trump suggested progress on potential trade agreements with India, Japan, South Korea, and potentially China. A state-linked social media post indicated the U.S. had initiated talks with Beijing despite recent tariff hikes.

Dollar Gains, Yen Weakness Add Headwind

The U.S. Dollar Index edged higher, supported by a sharp drop in the Japanese yen following the Bank of Japan’s dovish signals. The dollar now eyes resistance at 100.276, with a potential breakout to 101.30.

The yen slipped over 1% after the BoJ left rates unchanged and downgraded inflation and growth forecasts, reducing expectations for future tightening. While the dollar was steady versus the euro and pound, a broadly firmer greenback added downward pressure on dollar-denominated gold.

Soft U.S. Data Complicates Fed Path

U.S. economic signals remain mixed. Q1 GDP shrank at a 0.3% annualized rate, and March’s PCE inflation was flat, while jobless claims rose to 241,000—well above expectations. Treasury yields held firm, with the 10-year at 4.15%, but market participants are increasingly betting on a potential Fed rate cut starting in June. However, the Fed is not expected to adjust rates at next week’s meeting, waiting instead for clearer signs of inflation easing or labor market softening.

Gold Prices Forecast: Bearish Bias if Support Fails

While long-term fundamentals—like uncertain monetary policy and persistent geopolitical risks—continue to support gold, the current environment favors sellers. If prices break below $3164.23 with no sign of buying interest, further downside toward $3080.45 is likely. Traders should watch Friday’s payrolls report closely; any surprise could reshape rate expectations and either validate or challenge the bearish gold prices projection.

More Information in our Economic Calendar.