Market Data 
- Gold price dives over 1% lower on Tuesday as US President Trump signed an executive order to ease tariffs on cars.
- Traders are on the lookout for key US economic data, with the US GDP high on the agenda as it coould hint at the impact of tariff policy.
- Both daily resistances and supports for Gold are narrowing, signaling the increasing chances of a breakout, from a technical point of view.
Gold price (XAU/USD) dips over 1% lower halfway through the European trading session towards $3,275 on Wednesday as traders await key US economic data, which could become the catalyst for an imminent breakout. Bullion is facing a second day of some profit taking after United States (US) President Donald Trump signed an executive order to ease tariffs on car parts, as the President pointed out the progress in trade negotiations, Bloomberg reported. With more signs that trade tensions are diminishing, the Gold rally looks to be fading.
On the economic calendar, all eyes shift to the preliminary reading for the US Gross Domestic Product (GDP) for the first quarter. This is one of the key data points the Federal Reserve could look at when deciding what to do on May 7 regarding interest rates. That same Fed and its chairman, Jerome Powell, got called out again by Trump overnight, saying he knows far more about interest rates than Powell and that he is not doing a good job, Bloomberg reported.
Daily digest market movers: PCE and GDP ahead
- Investors rattled by the growing global trade war flocked to gold-backed exchange-traded funds in the first quarter, with inflows propelling bullion’s 19% rally in the three-month period, according to the World Gold Council. Investors added about 227 tons of bullion to Gold ETFs in the first quarter, the most since 2022, helping prices to increase to fresh record highs, Reuters reports.
- Indian jewelry sales slumped in March compared to the same month last year, and are expected to decline by up to 11% during the fiscal year through March 2026, Bloomberg reports.
- At 12:30 GMT, the preliminary reading of the first quarter for US Gross Domestic Product is to be released. Economists expect the US economy to have grown by a modest annualized rate of 0.4%, much slower than the 2.4% expansion seen in 2024’s fourth quarter.
- The monthly PCE data for March will also be released. The Monthly Core PCE is expected to come in at 0.1%, down from 0.4%. The monthly headline number is expected to fall to 0%, from 0.3% previously.
Gold Price Technical Analysis: Testing the water
With the reprieve in tariff stress following Trump’s easing some auto tariffs, odds for a breakout to the downside in the Bullion looks likely. However, the US data could play a crucial role here, for example in case the US GDP numbers show a contraction. Should Trump have a change of heart again and issue more surprise tariffs for example, a boost in Gold would be inevitable.
The daily Pivot Point at $3,322 is the first level that needs to be reclaimed on the upside. From there, the next level to watch out for on the upside is $3,344, the R1 resistance. The R2 resistance at $3,370 is for now the guard keeper on the upside to try and reject Gold price to re-enter above $3,400.
On the downside, the S1 support is providing a cushion at $3,295. Further down, the technical pivotal floor near $3,245 (April 11 high) comes into play.
XAU/USD: Daily Chart
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
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