Gold Prices Begin to Come Under Pressure Amid the Fed's Hawkish Tone and Improving US-China Trade Relations
Global gold prices slowly began to lose their upward momentum in trading on Friday (October 31st) US time, as market sentiment turned more cautious regarding the direction of US monetary policy and the easing of trade tensions between Washington and Beijing.
On the spot market, gold fluctuated in the range of US$3,940–US$4,020 per troy ounce, down slightly from its peak late last week. Selling pressure emerged after investors assessed that the factors driving the previous rally—such as the Fed's interest rate cut and geopolitical uncertainty—were now losing their traction.
"The more hawkish tone of Jerome Powell's speech following the 25 bps interest rate cut led the market to assess that the room for further easing was less than expected," wrote a Reuters report, citing analysts at Kpler Research.
The improving trade relations between the United States and China also dampened demand for safe-haven assets. In a meeting held in Malaysia, President Donald Trump and President Xi Jinping reportedly reached a preliminary agreement to reduce some import tariffs and resume exports of agricultural products and rare earth metals for one year.
This agreement was seen as a positive step that calmed global markets, especially after months of trade tensions that had strained global supply chains. However, for gold, this condition actually acted as a restraining factor as investors began to shift to riskier assets such as stocks and corporate bonds.
"Any sign that US-China tensions are easing naturally reduces demand for gold. However, investors remain cautious as this agreement is still tactical and does not address the root of the problem," wrote FXStreet in its analysis.
From a technical perspective, gold prices are currently facing strong resistance at US$4,050 per troy ounce, while the nearest support is around US$3,940. Analysts estimate that if selling pressure continues, the correction could extend towards the US$3,900 range, a psychological area that has served as the bottom line in the past two weeks.
Overall, although gold is still maintaining its medium-term uptrend, the combination of the Fed's hawkish signals, a strengthening dollar, and improving US-China trade relations is now starting to weigh on the price of this precious metal.
"Gold's upward momentum is starting to wane. Without new catalysts from the monetary or geopolitical perspective, investors may start to take profits," said Bloomberg Intelligence analysts in their report.
Source: Newsmaker.id
