Selling gold amid de-escalation of trade tensions with target of 3100

On Monday, May 12, gold extended last week’s decline, falling to 3,280. Prices were pressured by news of a possible de-escalation of trade tensions, which reduced demand for safe-haven assets.

Over the weekend, the US and China held negotiations that, while not yielding concrete results, gave markets hope for easing trade conflict. The two largest economies agreed to establish a mechanism for further talks, led by US Treasury Secretary Scott Bessent. Anticipation of positive developments strengthened the dollar, making gold more expensive for buyers outside the US.

Earlier, tensions escalated after President Trump imposed record 145% tariffs on Chinese goods, aiming to shrink Beijing’s trade surplus with the US and counter its retaliatory measures. In response, China increased duties on American imports to 125%.

Developments in other global markets also affected gold prices. A temporary resolution of the conflict between India and Pakistan reduced geopolitical risks, dampening demand for safe-haven assets. However, gold prices may find support as Peru is expected to cut production by 60,000 ounces next month, tightening supply.

Meanwhile, last week the Federal Reserve warned of rising inflation and labor market risks. Chairman Powell ruled out a preemptive rate cut in response to trade policy concerns, increasing pressure on gold as a non-yielding asset.

Technical analysis signals bearish momentum in the gold market. The MACD indicator is trending downward, while the main and signal lines have not crossed yet. The RSI has declined over the past few days and now stands at 42, confirming increasing selling pressure.

Current recommendation:

Sell at the current price. Take-profit could be set at 3100. Set a stop loss at 3400.