Gold prices slipped 1.1% during Monday’s trading, erasing the previous session’s gain of 0.6%, and are currently trading below the key level of $4700 per ounce.
The yellow metal is currently trading below the weekly pivot point at $4660, reflecting continued downward pressure on prices. Holding below this level is likely to reinforce the bearish trend, with support levels targeted at $4556, followed by $4396.
If gold break above the weekly pivot point at $4660, it may test the first weekly resistance level at $4820, a break above this level would be a positive signal that could pave the way for prices to rise toward the second resistance level at $4924.
In terms of geopolitical escalation, Tehran issued a response to a U.S. plan to end their more than two-month-old conflict, focusing on concluding the fighting on all fronts and demanding compensation for war damage.
Writing on social media within hours after Iran appeared to make its counteroffer, President Trump said, “I don’t like it—TOTALLY UNACCEPTABLE.” No further details were provided.
The U.S. has proposed bringing the war to a swift end, followed by more detailed negotiations on key issues, especially Iran’s nuclear ambitions.
On the other hand, Trump will visit China for a much-anticipated – and previously postponed – summit with President Xi Jinping between May 13 and 15, Chinese state media reported on Monday.
It will be the first major trip to Beijing by a U.S. leader in nearly a decade and is aimed at mending strained ties between the world’s largest economies.
Along with the Iran war, Trump and Xi are expected to discuss disputes over trade tariffs and Taiwan. The two are also likely to extend a trade truce signed in October, media reports said.
From a fundamental perspective, the U.S. consumer price index is due to highlight a slate of key economic data points.
Set to be released on Tuesday, the figures for April could provide a glimpse into the impact of the Iran war on U.S. inflationary pressures. In March, CPI accelerated, driven mostly by a sharp spike in gasoline-pump prices.
In April, headline consumer prices are seen increasing by 3.7% on an annualized basis, up from 3.3% previously. But, month-on-month, the number is tipped to slow to 0.6% from 0.9%.
Elsewhere, Federal Reserve Chair Jerome Powell’s term at the helm of the U.S. central bank is due to come to an end on Friday.
Trump has tapped former Fed Governor Kevin Warsh to replace Powell, with the U.S. Senate widely anticipated to confirm the appointment this week.
But Powell, who has become a frequent target for Trump’s ire that the Fed has not moved to aggressive ratchet down interest rates to boost the economy, has indicated that he will stay in his own governor role after his time as chair concludes.
That governor role is set to extend until 2028. Powell said the decision was connected to his desire to wait to see if Trump’s legal attacks on the central bank come to an end.