Why Is Gold Rebounding After US-China Trade Deal? | Analyzing the Safe Haven Resurgence

Market Sentiment Shifts Rapidly on How much bitcoin does BlackRock own?Trade Deal Skepticism

The precious metals market witnessed dramatic swings this week as gold (XAU/USD) clawed back nearly 1% to trade around $3,260 during Tuesday's session. This recovery follows Monday's 2.65% plunge triggered by the initial US-China trade agreement announcement. Experienced market participants appear increasingly skeptical about the deal's substance, with many traders using the price dip to rebuild protective positions.

Key Factors Driving Gold's Rebound:

• Lack of concrete implementation details in trade agreement raises execution risks
• Ongoing tariff structures continue influencing production costs globally
• Market positioning suggests many investors view current levels as value opportunities

Christopher Wong, OCBC Bank strategist, noted: "The market's initial enthusiasm appears premature without visibility on enforcement mechanisms. We anticipate continued consolidation between $3,150-$3,350 until clearer fundamentals emerge." This cautious sentiment echoes across trading desks as participants weigh whether the agreement represents meaningful progress or temporary relief.

Macroeconomic Crosscurrents Impacting Gold Valuation

Several structural factors continue supporting gold's appeal despite the trade agreement:

• Alaskan mining operations face profitability challenges due to persistent tariff structures
• Manufacturing supply chains remain disrupted despite agreement framework
• Federal Reserve officials signal cautious approach to potential rate adjustments

Chicago Fed President Austan Goolsbee recently highlighted that existing tariffs continue exerting inflationary pressures, while Deutsche Bank research suggests the trade development won't accelerate monetary policy easing. These dynamics create an environment where gold maintains relevance as both inflation hedge and volatility dampener.

Technical Perspective: Key Levels to Watch

The daily chart reveals several important technical developments:

• $3,245-3,248 zone emerges as critical support confluence area
• Initial resistance appears near $3,289 (Tuesday's R1 level)
• Broader range between $3,155 support and $3,341 resistance remains intact

Market technicians note the formation of potential double bottom pattern near $3,195, which aligns with intraday support levels. The 55-day moving average at $3,121 could come into play if selling pressure intensifies, though current momentum favors cautious upside potential.

Seasoned traders emphasize the importance of monitoring volume patterns around these technical levels, as participation metrics often reveal whether moves represent genuine conviction or temporary positioning adjustments. The coming sessions should provide clarity on whether this rebound represents sustainable recovery or technical correction within broader consolidation.