empty
01.05.2025 11:40 AM
Why Gold Is Falling for the Third Consecutive Day

Gold is declining for the third straight day amid signs of potential progress in trade negotiations between the U.S. and several other countries, which is dampening demand for safe-haven assets—even as signs of economic slowdown emerge in major economies. These positive signals reduce the appeal of gold as a reliable safe-haven asset, despite concerning indicators of economic deceleration in the world's leading economies.

This image is no longer relevant

Investors, previously worried about the prospects of a global recession, are now looking hopefully at the potential resolution of trade disputes. Expectations of trade deals are pushing them toward higher-risk assets like equities, which weakens demand for gold. However, despite the optimism, concerns remain about the long-term stability of the global economy. Recent data points to a slowdown in the growth of the U.S. economy, which could renew interest in gold as a hedge against economic shocks.

In the short term, gold price dynamics will likely depend on the progress of trade negotiations and macroeconomic statistics. If progress on trade continues, pressure on gold will persist. Conversely, if economic outlooks deteriorate, gold may regain its position as a safe-haven asset.

As of yesterday, gold prices dropped 1.8% after U.S. Trade Representative Donald Trump's office stated that the first tranche of trade deals was close to being announced. Adding to the optimism, China Central Television reported that the U.S. had reached out to Beijing through multiple channels.

Still, gold remains near this year's highs after hitting a record above $3,500 last week. That surge was largely driven by investors seeking safety in gold, as Trump's fast-changing trade policies roiled markets and intensified fears of a global slowdown. Speculative demand in China and purchases by central banks also supported the rally.

As noted earlier, the U.S. economy contracted at the start of the year for the first time since 2022 due to a massive spike in imports ahead of tariff implementation. This prompted traders to ramp up bets on monetary policy easing in the U.S., with four quarter-point rate cuts already priced in by the Federal Reserve for this year to help stave off recession. Lower rates are generally positive for gold prices, as the metal does not yield interest.

Looking ahead, an important U.S. monthly jobs report is due Friday, which is expected to shed more light on the initial economic impact of Trump's trade policies.

This image is no longer relevant

As for the current technical picture of gold, buyers need to reclaim the nearest resistance at $3,255. This would allow for a potential move toward $3,296, above which breaking through will be quite challenging. The ultimate target would be the $3,347 level. In the event of a decline, bears will aim to take control at $3,209. If successful, a breakout below this range would deal a serious blow to bullish positions and push gold down to the $3,166 low with a potential slide toward $3,116.

Jakub Novak,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

The Fed Is Right—It's Too Early to Cut Rates (I Expect a Decline in #SPX and an Increase in Gold Prices)

The fresh U.S. Consumer Price Index (CPI) data released on Wednesday, although below the consensus forecast, confirmed the persistence of inflationary pressure. This fully justifies the Federal Reserve's reluctance

Pati Gani 10:37 2025-06-12 UTC+2

Trump Threatens Tariffs Again – Markets React

President Donald Trump announced yesterday that he intends to send letters to trade partners within the next one to two weeks outlining unilateral tariff rates. This is ahead

Jakub Novak 09:10 2025-06-12 UTC+2

What to Pay Attention to on June 12? A Breakdown of Fundamental Events for Beginners

A significant number of macroeconomic reports are set for Thursday, but only a few are truly important. The key reports to highlight are the GDP and industrial production data from

Paolo Greco 05:52 2025-06-12 UTC+2

GBP/USD Overview – June 12: Protests Against Trump and Fed Policy

The GBP/USD currency pair continued to trade very calmly on Wednesday. Naturally, when U.S. inflation data was released, we saw a brief burst of market reaction—though it didn't last long

Paolo Greco 04:07 2025-06-12 UTC+2

EUR/USD Overview – June 12: Is There Light at the End of the Tunnel?

The EUR/USD currency pair continued to trade very calmly throughout Wednesday. The market showed no reaction whatsoever to the seemingly positive news regarding U.S.-China trade negotiations. Why? Because that positivity

Paolo Greco 04:07 2025-06-12 UTC+2

Donald Trump Plans to Suppress the Uprising

For several consecutive days, protests and unrest have continued in some major U.S. cities, sparked by Donald Trump's new immigration policy. This time, the U.S. President has decided to deport

Chin Zhao 00:35 2025-06-12 UTC+2

EUR/USD. In the Shadow of the Trade Deal: U.S. Inflation Report Pressures the Greenback

A mixed U.S. inflation report pressured the greenback. The dollar index returned to 98.00, while the EUR/USD pair refreshed its weekly high, rising to 1.1491. Additional pressure on the U.S

Irina Manzenko 00:35 2025-06-12 UTC+2

Will the Dollar Maintain the Status Quo?

To make accurate predictions about the future, one must examine the past. The more than 10% rally in EUR/USD since the beginning of the year has been driven by four

Marek Petkovich 00:35 2025-06-12 UTC+2

XAU/USD. Analysis and Forecast

Currently, the price of gold remains confined within a weekly range. The key factors supporting price growth include a decision by the U.S. federal appellate court to uphold President Donald

Irina Yanina 18:35 2025-06-11 UTC+2

USD/JPY. Analysis and Forecast

At this stage, the Japanese yen continues to trade within an intraday consolidation range, approaching the two-week low against the U.S. dollar reached yesterday. The main factors influencing the movement

Irina Yanina 18:33 2025-06-11 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.