Gold News: U.S.-China Trade Talk Optimism Dents Safe-Haven Appeal, Eyes on Powell’s Speech

Gold Prices Retreat from Highs as Trade Talks and Fed Decision Dominate Focus

Gold prices slipped more than 1% on Wednesday, retreating from recent highs as optimism around U.S.-China trade discussions and anticipation of the Federal Reserve’s policy announcement reduced safe-haven demand. XAU/USD had touched its highest level since April 22 before facing resistance. Market participants now await the Fed’s verdict, which could determine the next directional push for bullion.

At 12:44 GMT, XAU/USD is trading $3388.90, down $42.24 or -1.23%.

Trade Deal Hopes Undermine Safe-Haven Demand

Risk sentiment improved after news broke that U.S. Treasury Secretary Scott Bessent and trade negotiator Jamieson Greer will meet top Chinese economic official He Lifeng in Switzerland this weekend. The meeting follows escalating tariff exchanges in April that had spurred global recession fears and driven gold higher. Now, with both sides hinting at de-escalation, appetite for safety has cooled. Bessent noted the meeting is about “de-escalation, not the big trade deal,” but even minor progress may weigh further on gold in the short term.

Fed Holds Key to Gold Prices Forecast

The Federal Reserve is widely expected to keep rates unchanged at its announcement later today, with FedWatch Tool pricing in a 95.6% probability of no hike. However, only a 30% chance of a cut is seen for the June meeting. Traders will scrutinize Chairman Powell’s post-decision speech for clues on whether the Fed sees risks that might warrant rate easing. A dovish tilt could reignite interest in gold, which tends to benefit from lower real yields.

Geopolitical Risks Add Backstop for Bulls

Tensions between India and Pakistan resurfaced, with reported airstrikes and the downing of five Indian jets. Though not yet fully reflected in market pricing, any escalation could reignite demand for gold as a geopolitical hedge. Additionally, currency market volatility — particularly involving the Taiwan dollar and yen — may continue to support gold indirectly through safe-haven flows if dollar strength wavers.

Support and Resistance Levels in Focus

Technically, immediate support is seen at $3351.08, followed by $3318.50. Stronger downside protection sits within the retracement zone between $3228.38 and $3164.23, which capped losses last week at $3201.95. A break above $3435.06 would signal a resumption of the uptrend, putting the record high at $3500.20 back in play.

Gold Prices Forecast: Neutral-to-Bullish Outlook

While the short-term pullback reflects fading safe-haven demand on trade optimism, the broader gold prices forecast remains neutral-to-bullish. Supportive technical levels remain intact, and potential rate cuts or geopolitical instability could revive buying interest. Traders should watch the Fed’s tone closely and monitor developments from the U.S.-China meeting this weekend for the next catalyst.

More Information in our Economic Calendar.