Gold Weekly Forecast: Investors Await US-China Trade News and US Inflation Data

Gold price developments last week

Gold (XAU/USD) has been volatile over the past week, starting with an impressive rally driven by safe-haven flows, then weakening due to US monetary policy signals and expectations of a global trade recovery.

At the beginning of the week, gold prices jumped nearly 3%, surpassing the $3,400/ounce threshold due to concerns about geopolitical escalation. The missile attack near Ben Gurion Airport (Israel) claimed by the pro-Iranian Houthi forces, along with the Israeli Prime Minister's announcement of retaliation and the ongoing tensions between India and Pakistan, have caused investors to seek gold as a hedge.

However, expectations of a US-China trade deal somewhat dampened demand for safe havens by mid-week. Washington’s confirmation of a high-level meeting with Chinese representatives on Saturday in Geneva created positive sentiment in the market, pulling gold prices back below the $3,400/ounce mark.

Gold continues to be under pressure after the Federal Reserve's policy meeting. Although the Fed did not adjust interest rates, Chairman Jerome Powell appeared cautious about inflation and was not ready to change monetary policy.

The statement slashed the odds of a rate cut in June from more than 50% to less than 20%, supporting the dollar and pushing gold down nearly 2% on the day.

In addition, the US-UK trade agreement and President Trump's comments on the possibility of reducing tariffs with China also kept the market risk sentiment positive, continuing to put pressure on gold prices in Thursday's session.

Geopolitical risks, however, continue to play a role in boosting gold prices. Military tensions between India and Pakistan escalated sharply in the second half of the week, with missile and drone launches and casualties rising. This is a supportive factor that helps gold prices stabilize around the $3,300/ounce range.

However, buyers are still hesitant in the face of conflicting information. With the upcoming US-China trade talks and April inflation data from the US about to be released, the gold market will continue to be volatile next week.

Investors will be particularly interested in new signals on tariff policies and interest rate guidance from central banks to determine the next trend of precious metals.

Gold price this week: Investors await US-China trade news and US inflation data

Gold investors are entering the new week with a cautious mindset, as the market focus is on the results of the US-China trade negotiations and important economic data from the US, especially the April inflation report.

According to analysts, gold prices could start the week with strong fluctuations, depending on the content of statements after negotiations between the US and China.

If the two sides reach an agreement to suspend or reduce tariffs on some goods and commit to continuing negotiations, this could reduce demand for safe-haven gold and put pressure on prices early on Monday.

Conversely, if there are no positive signs of trade tensions easing, gold could rebound as a hedge against uncertainty.

Investors are also watching the possibility of the US signing bilateral trade agreements with other countries, especially in Asia.

US Commerce Secretary Howard Lutnick said Washington would announce a number of new deals next month. If confirmed, this would be a signal supporting market sentiment and at the same time detrimental to gold prices.

Besides the trade factor, the US Consumer Price Index (CPI) report for April will be released on Tuesday and is expected to be a strong catalyst for the gold market.

Both the overall CPI and the core CPI (excluding food and energy) are forecast to rise 0.3% month-on-month. If the core CPI beats expectations, the dollar could rise and put pressure on gold. Conversely, if the index is lower than 0.2%, gold prices will have a chance to rebound on expectations that the Fed will ease monetary policy soon.

Besides, other data such as April retail sales (released on Thursday) and the preliminary May consumer sentiment index from the University of Michigan (released at the end of the week) are considered to have less impact on gold prices, unless there is a sudden change.

Geopolitical factors cannot be ignored. The ongoing tensions between Israel and Iran, coupled with the increasingly tense situation between India and Pakistan, continue to maintain global risks. If the situation escalates, gold’s role as a safe haven will come into play and could drive prices higher, regardless of economic factors.

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