Gold prices made a strong reversal during the American session, dropping below $3,370 after testing the $3,400 level earlier in the day. This decline was largely driven by improved market sentiment following a phone conversation between U.S. President Donald Trump and Chinese President Xi Jinping. Meanwhile, a shift in expectations around the ECB’s monetary policy added to the pressure on the precious metal.
ECB Hints End of Rate Cut Cycle
The European Central Bank, as widely expected, cut interest rates. However, what moved markets more was President Christine Lagarde’s optimistic tone. She noted that policymakers are nearing the end of the monetary policy cycle and downplayed the likelihood of further cuts. This upbeat outlook from the ECB reduced the demand for gold as a safe haven.
Trump–Xi Call Sparks Risk Appetite
Later in the day, President Trump announced a “very good” call with Chinese President Xi and revealed that a new round of talks is coming soon. He also emphasized strong relations with Germany during a conversation with Chancellor Friedrich Merz. These developments boosted risk sentiment across markets, prompting traders to move away from safe assets like gold.
Conclusion
After touching a session high of $3,403.55, gold now trades near the daily low in the $3,340 zone. All eyes are now on the upcoming U.S. Nonfarm Payrolls report on Friday, with analysts expecting 130K new jobs added in May and the unemployment rate to remain at 4.2%. The results could be a key driver for gold’s next move.
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