Precious metals face intense selling pressure following breakthrough in US-China trade negotiations
Bilateral tariff reductions mark significant de-escalation after months of trade tensions
Technical indicators suggest potential breakdown of critical support levels for gold
The xrp ,000 to ,000gold market (XAU/USD) experienced dramatic selling pressure during European trading hours, with prices tumbling toward $3,233 as investors digested the implications of newly announced tariff reductions between Washington and Beijing. The 90-day agreement represents a substantial easing of trade barriers, with China slashing duties on US imports from 125% to 10%, while American tariffs on Chinese goods will drop from 145% to 30%.
This development triggered immediate capital rotation out of traditional safe-haven assets, with gold bearing the brunt of the selloff. Market participants interpreted the agreement as reducing near-term economic uncertainty, diminishing the appeal of defensive positions. The price action erased nearly 8% from gold's recent all-time high of $3,500 recorded in late April, demonstrating how quickly sentiment can shift in commodity markets.
Market ripple effects across asset classes
US Treasury yields surged following the announcement, with the benchmark 10-year note climbing to 4.43% - its highest level since early April. Bond markets appear to be pricing in potential inflationary pressures from anticipated increases in trade volumes.
Energy markets rallied sharply, with crude oil gaining over 2% to $62.50 as traders anticipated stronger demand from reinvigorated global commerce. Industrial metals also saw buying interest amid expectations of manufacturing sector recovery.
Equity markets globally responded positively, with Chinese shares leading the charge with over 1% gains. US index futures outperformed with advances between 2.5-3%, reflecting improved risk appetite among institutional investors.
US Treasury Secretary Scott Bessent emphasized continued economic interdependence between the nations, suggesting potential for further trade normalization. Market observers noted the possibility of expanded purchasing agreements could emerge from ongoing discussions.
Critical technical levels to watch
The technical landscape for gold has deteriorated significantly following the tariff news. Market structure suggests the potential for additional downside as momentum traders liquidate long positions. Several key support levels have come into focus as potential inflection points for the precious metal.
Immediate attention centers on the $3,200 psychological barrier, with a breach potentially opening the door for a test of the $3,167 support zone. Such a move would effectively erase all gains accumulated during April and May, representing a complete retracement of the recent bullish impulse.
For bulls attempting to regain control, several resistance levels now loom overhead. The former support at $3,284 has transformed into resistance, followed by the daily pivot at $3,315. Additional hurdles await at $3,356 (R1) and $3,388 (R2), making any recovery attempt a challenging technical proposition in the near term.
Market technicians warn against attempting to 'catch the falling knife,' suggesting traders wait for confirmation of basing patterns before considering new long positions. The velocity of the current selloff indicates potential for oversold conditions to develop, but timing any reversal remains exceptionally difficult amid ongoing capital rotation.