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Progress in trade talks, dovish Fed sparks risk-on rally – gold tests key $4,000 support
Macro scenario: trade truce + dovish Fed
US-China Agreement:
A "substantial framework agreement" was reached in Malaysia. No new 100 percent tariffs and a likely deferral of controls on rare earths.
Trump and Xi are expected to finalize the agreement during this week's APEC summit.
Result:
Global risk sentiment improves: Asian stocks gain more than 2 percent, S&P 500 and Nasdaq futures rise, along with oil and copper.
Safe-haven assets such as gold and Treasuries are experiencing profit-taking as risk appetite returns to the market.
Fed Expectations:
A lower-than-expected core CPI strengthens the Fed's accommodative stance. A rate cut is now fully priced in for this week's FOMC meeting.
US Dollar Index (USDX): Sideways but Vulnerable
Technical analysis:
Falling inflation has hit the dollar, but support at 98.00 has held. The index is now above 98.50.
However, the Fed's dovish outlook could limit further gains.
Key levels:
Gold (XAU/USD): Corrective phase underway, $4,000 remains crucial
Main drivers:
The easing of trade tensions has reduced demand for safe-haven assets. Profit-taking is accelerating the corrective movement.
Technical Analysis:
The metal is testing the key support at $4,000, the so-called “battle zone”.
Bears are waiting for a breakout, while bulls are defending the psychological level.
XAU/USD, 2-Hour Chart | Source: Ultima Markets MT5
What to monitor
➔ Are you shorting gold below $4,000 or waiting for a rebound?
➔ Is the dollar's rebound sustainable, or will the Fed limit gains?
➔ How are you positioning yourself ahead of the APEC summit?
Macro scenario: trade truce + dovish Fed
US-China Agreement:
A "substantial framework agreement" was reached in Malaysia. No new 100 percent tariffs and a likely deferral of controls on rare earths.
Trump and Xi are expected to finalize the agreement during this week's APEC summit.
Result:
Global risk sentiment improves: Asian stocks gain more than 2 percent, S&P 500 and Nasdaq futures rise, along with oil and copper.
Safe-haven assets such as gold and Treasuries are experiencing profit-taking as risk appetite returns to the market.
Fed Expectations:
A lower-than-expected core CPI strengthens the Fed's accommodative stance. A rate cut is now fully priced in for this week's FOMC meeting.
US Dollar Index (USDX): Sideways but Vulnerable
Technical analysis:
Falling inflation has hit the dollar, but support at 98.00 has held. The index is now above 98.50.
However, the Fed's dovish outlook could limit further gains.
Key levels:
- Support: 98.50 (a break would reopen the bearish risk)
- Resistance: 99.00
Gold (XAU/USD): Corrective phase underway, $4,000 remains crucial
Main drivers:
The easing of trade tensions has reduced demand for safe-haven assets. Profit-taking is accelerating the corrective movement.
Technical Analysis:
The metal is testing the key support at $4,000, the so-called “battle zone”.
- Above $4,000: likely uneven consolidation.
- Below $4,000: room for further decline, with subsequent supports at $3,950 and $3,900.
Bears are waiting for a breakout, while bulls are defending the psychological level.
XAU/USD, 2-Hour Chart | Source: Ultima Markets MT5
What to monitor
- FOMC and CPI: A more aggressive rate cut could weigh on the dollar and gold, while supporting risky assets.
- APEC Summit: Further progress in trade negotiations would maintain the "risk-on" tone. Any disappointment could reverse the trend.
- Technical triggers: 98.50 for USDX and $4,000 for gold remain the key levels.
➔ Are you shorting gold below $4,000 or waiting for a rebound?
➔ Is the dollar's rebound sustainable, or will the Fed limit gains?
➔ How are you positioning yourself ahead of the APEC summit?
