Gold Rebounds as Weak U.S. Data Fuels Safe-Haven Flows

Key Takeaways:

*U.S.-China Tariff Truce Spurs Risk Rally: Temporary trade deal led to a sharp early-week selloff in gold.

*Weak U.S. Data Reverses Trend: Downbeat inflation and retail sales data prompted a strong rebound in safe-haven demand.

*Geopolitical Risks Linger: Failed Russia-Ukraine talks and Putin’s absence reinforced investor caution

Market Summary:

Gold prices saw wild swings over the week, initially plunging as markets cheered a temporary U.S.-China trade truce but later rebounding sharply after a raft of disappointing U.S. economic data reignited concerns over growth and inflation.

At the start of the week, risk appetite surged after Washington and Beijing agreed to pause their trade war, with both sides committing to a 90-day tariff rollback. The U.S. announced a reduction in tariffs on Chinese imports from 145% to 30%, while China said it would lower duties from 125% to 10%. The deal triggered a broad shift towards risk assets and led to a sharp decline in gold, as investors rotated out of safe havens.

However, the rally in risk assets proved short-lived. Gold prices reversed course midweek following a series of worse-than-expected U.S. economic reports. Inflation metrics, including the Consumer Price Index (CPI) and Producer Price Index (PPI), came in below forecasts, while core retail sales also disappointed. The data signaled continued weakness in consumer spending and inflationary pressures, raising concerns that the earlier trade war had already inflicted deeper damage on the U.S. economy.

In response, investors turned back to gold, seeking refuge amid renewed fears of an economic slowdown. The metal regained lost ground, supported by growing expectations of a dovish policy shift by the Federal Reserve if economic weakness persists.

Geopolitical tensions also weighed on sentiment. The first direct talks in three years between Russia and Ukraine ended without any breakthrough, as Russian President Vladimir Putin failed to attend. The lack of progress added further uncertainty to the global outlook, bolstering safe-haven demand.

Technical Analysis

GOLD, H4

Gold is currently testing a key resistance level at $3,240, supported by bullish momentum on the MACD and a recent golden cross formation. The RSI has rebounded to 51 after dipping into oversold territory, signaling potential for further upside.

A confirmed breakout above $3,240 could open the door toward the next resistance at $3,340. However, if buying momentum weakens, a pullback toward the $3,130 support level may occur, with stronger support seen at $3,050.

Resistance levels: 3240.00, 3340.00

Support levels: 3130.00, 3050.00