Gold (XAUUSD) and Silver Drop Below Key Levels as Trade Deal Uncertainty Grows

The Chicago Fed National Activity Index has remained negative since April 2025. This negative trend indicates consistent weakness in U.S. economic output. This extended downturn reflects a broader economic deceleration, despite upbeat headlines about stock markets and trade negotiations.

On the other hand, the container rates remain depressed at $1,746 per 40-foot unit. This is a sign that global trade flows are contracting. This low level indicates slack in global manufacturing demand and fewer cross-border shipments, which often precede economic downturns.

Trade Flows Reflect Tariff Turbulence

The chart below shows that the US imports surged in Q1 2025 as companies rushed to build inventories ahead of new tariffs. However, imports began rising again by July 2025. This shows that while front-loading occurred earlier, overall US demand has remained resilient.

On the other hand, imports from China were volatile. They were strong in January but dropped sharply in the following months after President Trump’s tariff announcement. The decline persisted through Q2 2025, but July saw a rebound to $26.4 billion, driven by Trump’s pause on further tariffs. This volatility in Chinese import data adds to the uncertainty surrounding the global trade order.

According to President Trump, the deal is done and only requires final approval from both parties during the upcoming meeting. However, tensions persist. If President Trump and President Xi finalize a new agreement, it is unlikely to resolve the deeper trade and geopolitical issues.

Gold Faces Short-Term Headwinds from Dollar Strength

Gold prices are declining as the US dollar strengthens, driven by optimism over a potential breakthrough in U.S.-China trade talks. However, there is considerable uncertainty about the durability of any trade deal. The structural drivers of tension remain unresolved, and the U.S. economy continues to face deep economic challenges. As a result, gold (XAU) remains bullish in the long term. Therefore, any short-term correction will likely offer a buying opportunity for long-term investors.

The 4-hour chart for spot gold shows the price has broken below the $4,000 support level. This support previously served as the lower boundary of the ascending broadening wedge pattern. After the breakout, it touched the black dotted trend line around the $3,900 support level and initiated a rebound toward the $4,000 zone.

The price is now consolidating after breaking out of the wedge, reflecting market uncertainty. Meanwhile, the RSI has reached oversold levels not seen since July 2025. This oversold condition suggests that a short-term rebound may be developing.

The outcome of the upcoming meeting between President Trump and President Xi will likely shape the next significant move in the gold market. A recovery above $4,000 will be considered a bullish sign.

Silver Price Seeks Direction After Support Rebound

The 4-hour chart for spot silver also shows that the price has broken below the $47.60 support level. This support level marked the bottom of an ascending broadening wedge. After breaking below this support, the price rebounds from the strong support at $45.80, aligning with the black-dotted trend line.

After this rebound, the silver price is now seeking direction. A break above the $49 area would likely trigger a strong rally, while a break below $45.80 would signal further downside towards $45.