Gold Drops to $3,139 as Traders Ditch Safe Havens Before U.S. PPI Data

Gold tumbled to a 5 week low of $3,139 on Thursday as global risk appetite improved with the cooling of US-China tensions. Investors are rotating out of traditional safe havens like gold and into riskier assets after both countries agreed to a tariff reduction and 90 day ceasefire in their trade war.

While the truce is de-escalation, market participants are still cautious. The outcome post 90 days is unclear and broader macro uncertainty hasn’t gone away. But according to Brian Lan of GoldSilver Central, “With trade risks easing, investors are increasingly favoring equities and riskier plays.”

Markets now await today’s US PPI data which could further shape Fed policy.

Fed’s Rate Cut Timeline Shifts

The Fed has held rates steady, waiting for clearer signals on inflation trends and economic impact of US trade policy. So far the data has been mixed with consumer inflation coming in softer than expected, so investors are focused on today’s PPI numbers.

Fed Chair Jerome Powell is speaking later today and markets will be looking for guidance on whether easing could come sooner or later. Earlier forecasts had rate cuts starting in July but now traders expect the first 50 bps cut in October.

Low interest rates typically support gold by reducing the opportunity cost of holding the non-yielding asset. But shifting expectations and rising confidence in economic resilience has taken some shine off bullion.

Gold Technical Setup: Bearish Channel Says Sell

Gold is in a short term downtrend. On the 2 hour chart, prices are inside a well defined descending channel and have failed to reclaim resistance at $3,186 multiple times.

Trade Setup:

• Entry Zone: $3,150-$3,160 (after pullback)

• Targets: $3,095 and $3,058

• Stop-Loss: Above $3,186

MACD is bearish and staying in negative territory. Traders looking to short should wait for minor pullbacks to get in with better risk reward. Patience is key – don’t chase the move.