Gold Edges Higher Despite Easing U.S.–China Tensions
The gold price ( XAU/USD ) rose by 0.46% on Monday despite a decline in safe-haven demand caused by easing U.S.–China trade tensions.
Diplomatic engagement between Washington and Beijing boosted risk appetite, prompting market participants to shift away from traditional defensive assets like gold and government bonds. This change in sentiment followed the commencement of high-level negotiations in London. Officials from both countries met to stabilise a relationship strained not just by tariffs but also by strategic export controls on critical materials such as rare earth elements.
Statements from senior U.S. officials added to the optimism. U.S. Treasury Secretary Scott Bessent characterised Monday’s discussions as ’a good meeting’, while Commerce Secretary Howard Lutnick labelled them fruitful. These comments signalled a constructive tone and strengthened investor expectations of meaningful progress toward de-escalation. As a result, equity markets responded positively, interpreting the dialogue as a step towards restoring policy certainty between the world’s two largest economies.
XAU/USD declined during Asian and early European trading sessions after yesterday’s rise. Today, the formal macroeconomic calendar is relatively uneventful. Still, traders should monitor any developments in U.S. trade relations, which could impact market sentiment. Key levels to watch for XAU/USD are support at $3,290 and resistance at $3,345.
Euro Moves Sideways Due to a Lack of Significant Data
The euro ( EUR/USD ) rose slightly by 0.22% against the US dollar (USD) on Monday.
The rebound was supported by investor confidence that a diplomatic breakthrough between Washington and Beijing—particularly in areas such as rare-earth minerals and advanced technologies—could help ease global economic uncertainty and improve risk sentiment. Comments from U.S. officials confirmed that the negotiations were fruitful and that both countries made significant progress toward de-escalation.
On the monetary policy front, the European Central Bank’s (ECB) recent 25-basis-point rate cut was an effort to support growth by lowering borrowing costs to their weakest level since November 2022. While the central bank revised its inflation forecasts downward for 2025 and 2026, it also hinted that the current easing cycle may soon come to an end. This shift in tone tempered expectations of further aggressive cuts, creating a more cautious outlook and contributing to the euro’s resilience as traders reassessed the future path of European monetary policy.
EUR/USD declined during Asian and early European trading sessions. The macroeconomic calendar is rather light today, so the established trend will likely continue. Traders should also monitor speeches from ECB officials. Key levels for EUR/USD to watch are resistance at 1.14000 and support at 1.13800.
Sterling Strengthens as U.S.–China Talks Take Spotlight
On Monday, the British pound ( GBP/USD ) rose by 0.16% against the US dollar (USD).
U.K. unemployment edged up towards 4.6% in the three months to April 2025, aligning with market expectations and marking the highest rate since the three months to August 2021. The uptick from 4.5% reflects growing labour market slack, primarily due to increases in both short-term unemployment (up to six months) and long-term joblessness (over one year).
The data highlights underlying structural pressures in the labour market, suggesting a slower pace of reabsorption for displaced workers amid persistent economic headwinds. Although the overall unemployment rate didn’t surprise the market, the rise in long-term joblessness may lead policymakers to reconsider how they balance job support with controlling inflation, especially as the Bank of England plans its next policy move.
GBP/USD fell during the Asian and early European trading sessions. Although markets remained relatively quiet, traders should stay vigilant for any updates related to global trade tariffs. If the U.S. and China adopt a more conciliatory stance on tariffs, GBP/USD could correct sharply lower as improving risk sentiment reduces demand for safe-haven currencies. Key levels to watch are resistance at 1.35000 and support at 1.36000.