Gold News: Stronger Dollar and Trade Deal Chatter Weigh on Market Sentiment

Gold Prices Forecast: XAU/USD Drops Below Key Resistance as Dollar Strengthens

Gold edged lower on Thursday, testing support at $3318.50 after failing to break above $3351.08. The pullback follows a bearish lower high at $3435.06, which now acts as a critical ceiling. If gold breaks below $3201.95, it would confirm a downtrend on the main swing chart.

Technical indicators point to a possible slide toward the 50-day moving average at $3122.20 if current support levels give way. Bulls will need to reclaim $3351.08 to regain short-term momentum.

At 12:25 GMT, XAU/USD is trading $3353.20, down $11.15 or -0.33%.

Stronger Dollar Caps Gold Rally

The U.S. dollar index climbed to 100.04 on Thursday, pressuring gold as it gained against the yen and euro. The greenback rose 0.5% to 144.64 yen and 0.56% against the euro, as safe-haven flows moved into the dollar following trade deal headlines and continued uncertainty in rate policy.

Gold tends to weaken when the dollar strengthens, especially as it becomes more expensive for foreign buyers. The market reaction reflects increased investor confidence in the dollar following fresh trade optimism and the Fed’s cautious tone.

Fed Maintains Cautious Stance

The Federal Reserve left interest rates unchanged, as widely expected. However, Fed Chair Jerome Powell warned of elevated risks from inflation and unemployment, saying it’s unclear how policy should respond in the current environment.

Markets are still pricing in three quarter-point rate cuts by year-end, with the next move expected by September. But without a clear commitment from the Fed, Treasury yields held steady, limiting gold’s upside.

UK Trade Deal Undermines Safe-Haven Demand

President Trump announced that the U.S. and UK have reached a “full and comprehensive” trade agreement. Sterling initially spiked but pared gains after the Bank of England cut rates.

The deal is seen as a step toward reducing trade friction, easing market anxiety and reducing demand for defensive assets like gold. According to analysts, the market believes this could set a precedent for other potential deals.

China Adds Physical Support Through Import Quotas

China’s central bank approved more foreign exchange purchases for commercial banks to fund gold imports under expanded quotas. This move signals solid physical demand and may offer price support, especially as Asian buyers step in at lower levels.

Additionally, U.S.-China trade talks in Switzerland this weekend are drawing attention. Trump indicated that Beijing initiated the discussions, though he made it clear he wouldn’t offer tariff cuts just to keep talks going.

Gold Prices Outlook Bearish Below $3351