Gold price struggles as weak demand and Fed rate cut hopes collide

Gold (XAU/USD) prices show weakness after hitting a record level at $3,500. After recent highs, gold dropped closer to its latest swing low. Mixed signals from the US and China have confused investors. However, optimism over trade talks still supports some sentiment. At the same time, a drop in China's gold consumption has hurt bullion demand. The US Dollar struggles to maintain last week's recovery. Fed rate cut prospects and global risks keep gold's downside limited. Investors await stronger signals before committing to a clear direction.

Tariff uncertainty and Fed rate cut expectations shape price action

Gold prices have come under selling pressure recently. The fall in China's gold consumption weakens demand for the precious metal. Hopes for a quick de-escalation of the US-China trade tensions provide some support. However, uncertainty remains high as China denies ongoing tariff talks. The changing statements from US officials add more confusion to the market mood.

The US Dollar holds its recovery gains but struggles to push higher. Traders expect the Federal Reserve to resume rate cuts by June. Lower borrowing costs could help gold maintain a floor. Meanwhile, global geopolitical risks limit gold's downside, especially from the Russia-Ukraine war and North Korea's involvement. Investors prefer to stay cautious as risks stay elevated.

This week, key US economic data will guide the next move in gold. The JOLTS job openings, PCE inflation, and Non-Farm Payrolls will shape Fed expectations. A soft US data print could increase bets on rate cuts and lift gold again. Until then, gold remains vulnerable to fresh selling but is also supported by persistent global uncertainties.

Gold technical outlook: Ascending broadening wedge suggests potential volatility

The 4-hour chart for gold shows that the price forms an Ascending Broadening Wedge. Initially, gold followed a steady uptrend within the wedge. Minor pullbacks formed rounded bottoms, showing strong buying interest.

In early April, gold tested the lower boundary of the wedge. A strong rebound followed, supported by hopes of easing US-China tensions. This rally led gold towards the $3,500 mark. The price hit resistance and faced heavy selling pressure afterwards.

Currently, gold trades are near their recent levels. It remains inside the wedge but closer to the middle range. The structure suggests bulls are still active, but momentum has weakened. The broadening shape warns of increasing volatility. Traders should wait for a clear breakout confirmation. Upside and downside risks remain balanced for now.

Conclusion

Gold trades under pressure after hitting the $3,500 level but holds support from Fed rate cut prospects and global risks. Weak demand from China and mixed trade signals weigh on momentum. The technical wedge pattern shows that buyers and sellers are battling for control. Traders watch key US economic data this week to decide the next direction. Until then, gold has been exposed to selling but has found a strong floor from persistent global uncertainties.

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