Gold Holds Ground Near Record Highs Ahead of Fed Decision and US-China Trade Talks

Economic

Commodity

Summary:

Gold holds steady near $3,390 as markets await the Fed’s interest rate decision and renewed US-China trade talks. Investors eye key technical support at $3,350 amid geopolitical tensions and cautious sentiment.

BUY XAUUSD

Close Time

CLOSED

3389.76

Entry Price

3500.00

3320.00

4206.39 +8.48 +0.20%

697.6

Pips

Loss

3320.00

3318.86

Exit Price

3389.76

Entry Price

3500.00

Gold prices are trading in a narrow band on Wednesday, holding steady near the $3,390 mark during the European session. Investors appear to be in a state of suspension ahead of the Federal Reserve’s highly anticipated interest rate decision later today, and fresh developments in US-China trade relations that could reshape broader market sentiment. The precious metal, which recently surged to historic highs, has now paused for breath as traders weigh a complex backdrop of monetary policy signals, diplomatic overtures, and underlying geopolitical tensions.

At present, market participants are not pricing in a policy shift from the Federal Reserve. According to the CME FedWatch Tool, there is a 95.6% probability that the central bank will hold rates steady at its current level. This means that unless the Fed delivers a surprise rate cut—an unlikely scenario based on recent statements and market expectations—today’s rate announcement may be more of a “non-event” in terms of immediate rate changes. However, the tone and forward guidance from Fed Chair Jerome Powell during his post-decision press conference could have significant implications for gold and the broader asset complex. Investors will be listening closely for any dovish nuances that suggest the Fed may be considering rate cuts in the second half of the year, especially if economic activity continues to soften.

Despite repeated public pressure from President Donald Trump urging the central bank to adopt a more accommodative stance, the Fed has so far maintained its data-dependent posture. Powell has remained committed to resisting political influence, instead insisting that policy adjustments will be driven by macroeconomic indicators, particularly inflation data and labor market dynamics. With inflation cooling and recent manufacturing and consumer data pointing to potential cracks in the economy’s resilience, the case for rate cuts is gradually building. But for now, the Fed appears set to hold its ground and await more concrete signals.

Meanwhile, geopolitical dynamics are contributing to a layer of uncertainty. The United States and China have announced that they will reopen trade dialogue this weekend in Switzerland. The upcoming talks, led on the American side by Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer, and by Chinese Vice Premier He Lifeng on the other, are being framed not as formal negotiations, but rather as discussions aimed at de-escalation. Bessent, speaking on Fox News, clarified that the initial goal is to dial down trade tensions that have burdened global supply chains and stoked inflationary pressures in both economies.

While investors welcome any diplomatic engagement that could avoid the escalation of tariffs or a breakdown in trade flows, the impact on gold has been somewhat mixed. Typically, uncertainty around global trade tends to support safe-haven demand, but the tentative optimism surrounding renewed talks has, at least for now, subdued some of that risk premium in the gold market.

This slightly more constructive tone in trade relations comes even as other geopolitical risks remain elevated. Overnight, news broke that Pakistan had downed five Indian military aircraft in response to Indian strikes, claiming to have taken several soldiers prisoner. Historically, military skirmishes between nuclear-armed neighbors like India and Pakistan would trigger a sharp rise in haven assets. Yet, in today’s trading, the impact on gold has been surprisingly muted. This reflects a market that is currently far more reactive to macroeconomic policy cues than to geopolitical flashpoints—at least in the short term.

Technical Analysis

From a technical standpoint, gold’s recent surge was remarkably swift, leaving few clear entry points for new buyers. Now that prices are correcting slightly, traders may be viewing this as a potential re-entry opportunity. The 3350–3360 zone is emerging as a critical support area. If prices remain above this band, the market could consolidate before attempting another move toward recent highs. A break below this zone, however, could see gold test the 3330 level—a pivotal technical support that could either act as a springboard or signal the beginning of a deeper correction.

TRADE RECOMMENDATION

BUY GOLD

ENTRY PRICE: 3390

STOP LOSS: 3320

TAKE PROFIT: 3500

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

USD/JPY weakens to 143.40 as US-China trade talks lift risk appetite and weigh on the dollar. Technicals point to further downside unless 144.26 is reclaimed.

SELL USDJPY

Close Time

CLOSED

143.300

Entry Price

139.830

145.000

155.436 +0.091 +0.06%

170.0

Pips

Loss

139.830

145.004

Exit Price

143.300

Entry Price

145.000

The USD/JPY currency pair has come under renewed selling pressure this week, sliding to levels around 143.40 as investors respond positively to an apparent thaw in US-China trade relations. This shift in geopolitical tone, combined with softer demand for the US dollar ahead of a pivotal Federal Reserve policy meeting, has triggered renewed interest in the Japanese yen—a traditional safe-haven currency that appears to be gaining on the back of easing uncertainty rather than outright panic.

In recent sessions, the announcement that senior US and Chinese trade representatives will convene in Switzerland to resume formal discussions has prompted a reassessment of risk across global financial markets. After months of diplomatic friction and tariff-related threats, the move toward dialogue represents a clear shift in sentiment. It follows an unsettling episode earlier in the week when former President Donald Trump—widely seen as a likely 2024 candidate—announced 100 percent tariffs on US-produced films and warned that levies on pharmaceuticals could be announced shortly. Those remarks initially spooked markets and briefly sent the dollar higher against the yen, but the reversal in risk appetite has since dictated a different trajectory.

Technical Analysis

At the technical level, USD/JPY’s recent failure to reclaim and hold above the important pivot zone between 144.26 and 143.84 has proven pivotal. The rejection from this band has confirmed resistance in the near term, and the subsequent decline in price action suggests that bearish momentum is once again asserting itself. The currency pair’s trajectory now appears to be slanting downward, with the immediate downside target forming near the 141.97 region. A decisive break below that support area could expose the pair to further declines, potentially toward the next cushion around 141.02. If broader market sentiment remains favorable toward risk assets and the dollar continues to weaken, a drop toward the 139.83 threshold cannot be ruled out.

Conversely, should the pair manage to regain its footing and post a convincing close above 144.26, the technical outlook could shift to a more constructive stance. In such a scenario, upside resistance would be expected near 144.96, and eventually around the 146.33 area.

TRADE RECOMMENDATION

SELL USDJPY

ENTRY PRICE: 143.30

STOP LOSS: 145.00

TAKE PROFIT: 139.83

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

On the M15 chart on 07/05/2025, EUR/GBP is trading around 0.8500 after a slight increase from 0.8479 in the previous session, supported by expectations that the ECB will cut interest rates in June to deal with slowing inflation while the BoE may wait for more data before cutting interest rates...

BUY EURGBP

Close Time

CLOSED

0.85200

Entry Price

0.86000

0.84600

0.87437 +0.00121 +0.14%

60.0

Pips

Loss

0.84600

Exit Price

0.85200

Entry Price

0.86000

Overview

EUR/GBP M15 opened at 0.8494 and closed the session temporarily at 0.8500, showing a slight recovery after hitting a low of 0.8479 earlier in the session.. The eurozone just announced that April CPI remained at 2.2%, below the peak, creating expectations that the ECB will continue to cut interest rates by 25 basis points at its June meeting. In contrast, the BoE remained cautious after keeping interest rates at 5.00%, which limited the strength of the pound in the short term.

Money flows into the euro were supported by eurozone PMI reports showing manufacturing and services recovered slightly in April, supporting the common currency.

Market psychology

Investors reflected a slight optimism about the prospects of a European economic recovery, following April’s PMI of 54.1 for services and 51.2 for manufacturing, indicating that business activity remained above the 50 mark. The VIX fear index fell slightly, reflecting a flight to riskier assets such as Europe. The carry trade perspective also supported EUR/GBP as the ECB’s interest rate, despite the cut, was still higher than the BoE’s forecast for rates beyond July.

Technical analysis

EUR/GBP shows slight recovery after bottoming_1

Bollinger Bands (20,0,2) narrowed around 0.8480–0.8520, signaling low volatility in preparation for a new uptrend as the price breaks above the middle band. Ichimoku shows Tenkan-sen crossing above Kijun-sen and the price is trading above the Kumo cloud, confirming the short-term bullish signal. Stochastic (5,3,3) has left the oversold zone and is heading up, implying increasing buying momentum. MACD on the H1 chart also gave a positive divergence signal, supporting the uptrend on M15.

Trading Recommendations

Entry: BUY 0.852

TP: 0.86

SL: 0.8460

Risk Warnings and Disclaimers

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Alan

Central Bank

Forex

Summary:

The recent underperformance of UK economic data has elevated the likelihood of a rate cut by the Bank of England at its May 8 Monetary Policy Committee meeting, potentially exerting downward pressure on the British pound.

SELL GBPUSD

Close Time

CLOSED

1.33557

Entry Price

1.27600

1.34500

1.33229 -0.00083 -0.06%

94.3

Pips

Loss

1.27600

1.34510

Exit Price

1.33557

Entry Price

1.34500

Fundamentals

The UK economy is currently facing a complex landscape of challenges. Recent data indicates a continued contraction in the manufacturing PMI, with the April final reading at 45.4. Export orders have reached an eight-month low, directly reflecting the impact of the Trump administration's 25% tariffs on automobiles. This policy has significantly affected the automotive sector, which accounts for 20% of UK exports to the US, impacting companies such as Jaguar Land Rover, which have been compelled to suspend shipments to assess cost implications. Concurrently, while retail sales saw a reduced decline in April, the outlook for May has deteriorated to -33%, the lowest in a year, highlighting weak consumer confidence and the fragility of the economic recovery.

The Bank of England's (BOE) monetary policy stance further exacerbates the pound's challenges. Market consensus anticipates a 25 basis point interest rate cut to 4.25% on May 8, potentially signaling accelerated easing to counteract the tariff effects. The removal of "gradual rate cuts" from the policy statement could place additional pressure on the pound.

In contrast, the U.S. economy demonstrates relative resilience. April's non-farm payrolls exceeded expectations, with 177,000 jobs added, and the unemployment rate remained stable at 4.1%. Although the services PMI declined, it remains in expansionary territory at 50.8. The elevated price payments index at 69.8 supports the Federal Reserve's hawkish stance, with the market's expectation of a June rate cut decreasing to 37%. Furthermore, historical seasonal patterns indicate a 72% probability of the GBPUSD decline in May, with current market sentiment aligning with historical trends.

Technical Analysis

In the 4H timeframe, the GBPUSD is currently experiencing a period of consolidation within a high-level trading range. However, the declining peaks suggest a weakening of bullish momentum. Meanwhile, a head and shoulders top pattern is emerging, which increases the likelihood of a subsequent decline in the GBPUSD.

Currently, if the GBPUSD breaks the neckline of the head and shoulders top pattern at 1.3250, the potential for further downward movement will be realized. The initial downside target is projected to test the previous low at 1.2708.

It is recommended to go short at the highs.

Trading Recommendations

Trading Direction: Sell

Entry Price: 1.3350

Target Price: 1.2760

Stop Loss: 1.3450

Valid Until: May 21, 2025 23:00:00

Support: 1.3250, 1.2708

Resistance: 1.3402, 1.3443

Risk Warnings and Disclaimers

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Adam

Commodity

Summary:

On May 7, 2025, WTI Crude Oil price was trading around $59.60/barrel after increasing 2.72% to $59.58 on May 6, with downward pressure coming from forecasts of a 2.4 million barrel increase in US crude oil inventories and the decision of OPEC+ to continue boosting production...

SELL WTI

Close Time

CLOSED

1.160

Entry Price

58.000

61.000

1.850 +0.050 +2.78%

5684.0

Pips

Loss

58.000

1.180

Exit Price

1.160

Entry Price

61.000

Overview

On the morning of May 7, WTI opened at $60.10/barrel and quickly fell to $59.60 when news of a sharp increase in US inventories emerged. The EIA report showed that crude oil inventories were expected to increase, fueling selling pressure at NYMEX. OPEC+ has just announced plans to increase production by 411,000 barrels/day in June, creating a global oversupply. Although some US shale companies have cut rigs, production volume is still high, only decreasing from 13.2 to 12.9 million barrels/day, not enough to offset the excess supply.

Market psychology

Risk sentiment increased as signs of weakening demand emerged in Europe and China, while investors reacted negatively to April manufacturing PMI reports that showed slower growth in both markets. The VIX fear index rose, reflecting the flight of money from risky assets, including crude oil. EIA and Macquarie forecasts both revised their oil price outlooks lower for the second half of the year, with WTI now forecast to fall to $56 a barrel if demand remains weak.

Technical analysis

WTI under downward pressure from forecast of 2.4 million barrel increase in US crude oil inventories and OPEC+ decision to continue boosting production_1

On the M15 chart, Bollinger bands (20,0,2) are widening sharply to the downside, indicating increased volatility and increasing selling pressure.. Ichimoku confirms the bearish signal when Tenkan-sen crosses below Kijun-sen and price breaks below Kumo cloud. In particular, Stochastic (5,3,3) is in the overbought zone and shows signs of negative divergence, implying that the downtrend may continue to be stronger when the indicator exits this zone. Trading volume of recent red candles increased slightly, strengthening short-term selling pressure..

Trading Recommendations

Entry: SELL 59.6

TP: 58

SL: 61

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

On the morning of May 7, M15 session, USDX opened at 99.48 and quickly retreated to 99.46 as selling pressure spread after failing to successfully break the 100.00 mark...

SELL USDX

Close Time

CLOSED

99.180

Entry Price

99.000

99.230

98.900 -0.050 -0.05%

5.0

Pips

Loss

99.000

99.260

Exit Price

99.180

Entry Price

99.230

Overview

On 07/05/2025, the US dollar index (USDX/DXY) traded at 99.46, down slightly from 99.83 in the previous session, as the Bollinger bands (20,0,2) on the M15 chart widened downwards, suggesting that the downtrend could continue.

Markets are cautious ahead of the FOMC meeting later in the day, where Fed Chairman Jerome Powell will stress the need to “wait for more data” before making any rate cut moves.

Expectations that the Fed will postpone its policy easing plan until at least July have increased USD selling pressure, especially when US inflation is forecast to cool down in the upcoming April CPI report.

The downward pressure was also reinforced by the tug-of-war of Asian currencies, with the Chinese Yuan and the Korean Won appreciating slightly, limiting USD buying by Asian investors.

Market psychology

The VIX sentiment index remained high, reflecting concerns about geopolitical risks and global trade tensions, thereby causing investors to seek defensive assets instead of the USD.. FedWatch data shows that the probability of a rate cut at the May meeting is almost non-existent, with more than 80% of the market betting the Fed is not ready to ease. Meanwhile, Asian currencies such as the Chinese yuan (CNH) and the Korean won (KRW) gained slightly against the USD, as China cut its reserve requirement ratio to stimulate growth.

Technical analysis

Expectations that the Fed will delay its policy easing plan until at least July have increased USD selling pressure_1

On the M15 chart, Bollinger Bands (20,0,2) are expanding sharply in the direction of the price breaking the lower band, signaling increasing selling pressure. The Ichimoku indicator shows Tenkan-sen crossing below Kijun-sen, with the price remaining below the Kumo cloud, confirming the short-term downtrend. Stochastic (5,3,3) moves from the neutral zone to the overbought zone and shows a negative divergence, implying a further decline when the indicator exits this zone. The volume of the red candle on M15 is larger than the previous green candle, reinforcing selling pressure

Trading Recommendations

Entry: SELL 99.180

TP: 99

SL: 99.23

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

CAD/CHF traded around 0.5996 after falling from 0.6010 on May 6, when the Bank of Canada's decision to keep interest rates on hold at 2.75 percent dented the Canadian dollar's recent strength.

BUY CADCHF

Close Time

CLOSED

0.59900

Entry Price

0.60500

0.59500

0.58190 -0.00017 -0.03%

40.0

Pips

Loss

0.59500

0.59499

Exit Price

0.59900

Entry Price

0.60500

Overview

CAD/CHF opened at around 0.5981 this morning and quickly recovered to 0.5996 as the market digested the BoC's rate-keeping. Data showed CAD hitting CHF 0.59960 on 06/05/2025, up from a session low of CHF 0.59517. The BoC's cautious stance on global trade policy pressures and its unchanged interest rate helped stabilize the CAD temporarily.

In parallel, the SNB has maintained a dovish policy to curb inflation, with negative policy rates, allowing the CHF to maintain strength but lack momentum to break out.

Market psychology

Investors are balancing expectations for the FOMC minutes and US CPI data, which could influence the direction of the USD and indirectly shape the strength of CAD/CHF. Risk-off sentiment remains mildly present after crude oil fell more than 5%, dampening sentiment in commodity currencies like CAD. The VIX anxiety index remains elevated, reflecting geopolitical concerns and global trade relations, but the opportunity for carry trade in CAD remains intact thanks to higher interest rates compared to CHF. In addition, the Canadian economic outlook remains relatively bright with strong growth through 2024 but is being impacted by trade tensions with the US.

Technical analysis

CAD/CHF Recovers as BoC Holds Rate, SNB Hints at Cut, Crude Oil Falls Deep_1

On the M15 chart, Bollinger Bands (20,0,2) are constricting around the 0.5980–0.6000 zone, signaling low volatility and preparing for a new uptrend when the price touches the lower boundary. Ichimoku shows Tenkan-sen approaching Kijun-sen from below, while the price has held above the Kumo cloud, confirming the short-term uptrend signal. Stochastic (5,3,3) is oscillating in the oversold zone with a positive divergence, implying that buying pressure may explode when the indicator leaves this zone. Trading volume on M15 also recorded a slight increase in recent green candles, reinforcing the recovery momentum of CAD/CHF.