Gold markets are navigating another week of heightened volatility. After a bullish start on Monday and Tuesday, XAU/USD reversed course on Wednesday, with sellers regaining control. The precious metal faced strong rejection at the $3,430 level—an area that also acted as intraday resistance in April as gold attempted to break through all-time highs.
Gold (XAU/USD) daily chart
Past performance is not a reliable indicator of future results.
Monday’s surge marked a break from two consecutive weeks of downward pressure, drawing in fresh buyers eyeing a potential retest of the $3,500+ zone. However, ongoing fundamental uncertainties, particularly in U.S.–China relations, continue to drive erratic price action and keep traders on edge.
Trade Talks Reignite Market Volatility
The recent rebound in trade diplomacy has shifted market dynamics once again. U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer are scheduled to meet Chinese officials in what will be the first formal discussions since the U.S. imposed steep tariffs on Chinese goods. This renewed optimism around trade negotiations triggered a fresh wave of selling in gold on Wednesday.
Despite the pullback, gold remains underpinned by lingering investor caution. Mixed signals from both Washington and Beijing continue to cloud sentiment, while expectations of global monetary easing and a broader move away from U.S. assets provide ongoing support for bullion.
FOMC Decision Looms Large
All eyes now turn to the Federal Reserve’s policy meeting and Chairman Jerome Powell’s press conference later today. With markets already pricing in no change to interest rates, the spotlight will be on Powell’s tone and guidance for the months ahead.
Powell is widely expected to stick to the Fed’s cautious rhetoric, reflecting uncertainty over the economic impact of tariffs. Acknowledgment of sustained economic resilience or inflationary pressure could be perceived as a hawkish signal—dampening hopes of a June rate cut, boosting the U.S. dollar, and likely deepening the correction in gold prices.
Conversely, if Powell hints at heightened economic concerns and signals a potential rate cut in June, gold could regain upward momentum as investors reposition accordingly.
By Daniela Sabin Hathorn, senior market analyst at Capital.com
