Gold Price Struggles to Extend Gains Despite Recovery From Weekly Lows Ahead of US-China Talks

Gold Price Struggles to Extend Gains Despite Recovery From Weekly Lows Ahead of US-China Talks

The price of Gold (XAU/USD) reversed early losses on Monday, recovering modestly from one-week lows below $3,300 per ounce, but bullish momentum appears limited. The precious metal rebounded during the European session as the US Dollar (USD) eased from Friday's highs, but investor caution ahead of high-stakes US-China trade negotiations is keeping upside capped.

USD Weakness Offers Intraday Relief to XAU/USD

Gold prices have benefited from a cooling US Dollar, which failed to build on Friday's rally driven by strong US Nonfarm Payrolls (NFP) data. The retreat in the USD can be attributed to fiscal concerns and a slight pullback in market risk sentiment as investors brace for more clarity from ongoing global economic developments.

Geopolitical & Trade Tensions Reinforce Safe-Haven Appeal

A key factor supporting Gold’s price action remains geopolitical uncertainty. With global trade risks and simmering geopolitical concerns in focus, particularly around US-China relations, demand for safe-haven assets like gold remains intact.

While Friday’s NFP report — which showed better-than-expected US job growth and steady earnings — reduced the immediate likelihood of Federal Reserve (Fed) rate cuts, the broader uncertainty remains enough to attract defensive positioning into non-yielding assets like bullion.

Technical Overview – Key Levels to Watch

• Immediate Resistance: $3,350
• Key Support: $3,290
• Breakout Target: $3,375 if risk sentiment deteriorates

Although Gold has bounced back above key psychological and technical levels, the lack of conviction above $3,340 indicates traders are waiting for a clear catalyst, potentially from US-China trade dialogue scheduled later today in London.

Market Focus: US-China Trade Talks & Fed Speculation

Investors are keenly awaiting updates from the bilateral meeting between US and Chinese trade representatives, which could set the tone for market risk appetite and, in turn, influence gold demand.

Meanwhile, the Federal Reserve's blackout period ahead of next week’s FOMC decision has kept speculation restrained. Traders are now weighing whether the central bank will continue to hold rates steady or pivot later in the year, depending on inflation and labor market data.

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