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13/05/25
52
Gold Prices Stabilize Amid CPI Anticipation and US-China Trade Uncertainty
Gold prices are currently stabilizing just above the $3,200 threshold, following a notable decline of about 3% earlier in the week. As traders eagerly await the imminent release of the US Consumer Price Index (CPI) data, the market is experiencing a temporary pause in selling activity. This data is expected to significantly influence future trading directions for gold.
In recent trading sessions, gold has shown slight recovery, buoyed by a weakening US Dollar after a period of strength triggered by a tentative US-China trade agreement. This arrangement, reached during trade talks in Geneva, includes a reduction in tariffs from both nations, which has stirred optimism and reduced fears of a US recession. Consequently, market sentiment has shifted, with impacts on gold, traditionally viewed as a safe-haven asset.
However, sellers in the gold market are still cautious, especially with mixed signals regarding the US-China relationship and ongoing geopolitical tensions. Comments from US Trade Representative Jamieson Greer highlight the potential for reinstating tariffs if negotiations falter, adding to market uncertainty. This has led to a reevaluation of trading strategies among investors, particularly those who had built up positions in the dollar prior to the CPI release.
Looking ahead, the anticipated CPI figures are expected to reveal an annual inflation rate of 2.4% for April, with a core CPI holding steady at 2.8%. Should the data exceed expectations, it may bolster American currency values, putting further pressure on gold prices. Conversely, weaker-than-expected CPI results could rekindle hopes for multiple interest rate cuts from the Federal Reserve, potentially offering support to gold.
Technically, the gold market is showing bearish signals, particularly through the 14-day Relative Strength Index (RSI), which has dipped below the midpoint. In the event of negative CPI data, gold might regain the 21-day moving average, previously seen as resistance. Conversely, a stronger CPI outcome could lead to further declines, with support levels identified at $3,145 and $3,100. Only by breaking through significant resistance around $3,311 could gold challenge higher targets, including the notable $3,500 level.
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