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• Gold price drifts lower as the US-China trade truce optimism undermines safe-haven demand.
• Tuesday’s US CPI print reaffirms Fed rate cut bets and keeps the USD bulls on the defensive.
• Geopolitical risks could limit deeper losses for the XAU/USD pair, warranting caution for bears.

Gold price (XAU/USD) sticks to modest intraday losses, though it lacks bearish conviction and manages to hold comfortably above the $3,200 mark heading into the European session on Wednesday. The global risk sentiment remains well supported by the latest optimism over the de-escalation of a potentially damaging US-China trade war, which, in turn, is seen as a key factor undermining the safe-haven precious metal.

Meanwhile, the softer-than-expected inflation data from the US released on Tuesday reaffirmed bets for at least two interest rate cuts by the Federal Reserve (Fed) in 2025. This keeps the US Dollar (USD) on the defensive below a one-month top touched earlier this week and limits the downside for the non-yielding Gold price, making it prudent to wait for some follow-through selling before positioning for deeper losses.

Daily Digest Market Movers: Gold price struggles to lure buyers as trade optimism undermines safe-haven demand
 

• US President Donald Trump said on Monday that he does not see tariffs on Chinese imports returning to 145% after the 90-day pause. In a Fox News interview earlier this Wednesday, Trump said that the relationship with China is excellent, adding to the trade optimism and undermining the safe-haven Gold price during the Asian session.
• On the geopolitical front, Russia and Ukraine are set for their first high-level face-to-face talks since 2022 in Istanbul this week amid increasing demand for Russia to agree to a 30-day ceasefire. On the US side, Secretary of State Marco Rubio and special envoys Steve Witkoff and Keith Kellogg are expected to attend the negotiations.
• The Israeli military said it intercepted a hypersonic ballistic missile fired by the Iran-aligned Houthis militia group towards Ben Gurion Airport near Tel Aviv from Yemen on Tuesday evening. This keeps geopolitical risks in play and might hold back traders from placing aggressive bearish bets around the XAU/USD pair.
• The US Bureau of Labor Statistics (BLS) reported that the headline Consumer Price Index (CPI) edged lower to the 2.3% YoY rate in April from 2.4% in the previous month. Meanwhile, the core CPI, which excludes volatile food and energy prices, matched consensus estimates and rose 2.8% on a yearly basis in April.
• Traders are still pricing in the possibility that the Federal Reserve will lower borrowing costs by 56 basis points in 2025. This fails to assist the US Dollar to attract any meaningful buyers following Tuesday's pullback from a one-month high and should contribute to limiting deeper losses for the non-yielding yellow metal.
• There isn't any relevant market-moving economic data due for release from the US on Wednesday, leaving the USD at the mercy of scheduled speeches from Fed officials. Apart from this, the broader risk sentiment will play a key role in producing short-term trading opportunities around the commodity.

Gold price bears await a sustained break below the 200-period SMA pivotal support on H4 before placing fresh bets
 

From a technical perspective, the XAU/USD pair has been showing some resilience near the 200-period Exponential Moving Average (EMA), currently pegged near the $3,225 region, on the 4-hour chart since the beginning of this week. Given that oscillators on the daily chart have just started drifting in negative territory, a convincing break below the said support will be seen as a fresh trigger for bearish traders. A subsequent fall below the $3,200 round figure will confirm a fresh breakdown and make the Gold price vulnerable to resume its recent corrective slide from the $3,500 psychological mark, or the all-time peak touched in April. The commodity might then accelerate the fall towards testing the next relevant support near the $3,135 area.

On the flip side, the overnight swing high, around the $3,265-3,266 region, now seems to act as an immediate hurdle, above which the Gold price could aim to reclaim the $3,300 mark. Some follow-through buying and a move beyond the weekly high, around the $3,317-3,318 zone, might shift the bias in favor of bullish traders and lift the Gold price to the $3,345-3,347 hurdle en route to the $3,360-3,365 static barrier. A sustained strength beyond the latter will set the stage for a move towards the $3,400 round figure.

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