The demand for safe haven has cooled down, and gold has fallen to a new low in over a month. The market is focused on PPI and Powell's speech

On Thursday (May 15th), as trade tensions between China and the United States significantly eased, and investors remained cautious ahead of the release of key economic data in the United States, gold prices continued to fall, hitting a new low in over a month.

As of press time, spot gold prices fell 0.3% to $3167, reaching their lowest point since April 10th at $3120.64 during trading, with intraday fluctuations exceeding $70, reflecting intensified market volatility. Analysts pointed out that after a drop of over 2% in the previous trading day, gold prices attempted to continue their downward trend during the day. However, as risk sentiment gradually fell, the US dollar came under pressure, providing some support for gold.

According to analysis from FXStreet, gold is currently under pressure below $3200, and short-term trading remains weak. Market attention is focused on the upcoming release of the US Producer Price Index (PPI) and retail sales data, while Federal Reserve Chairman Powell's speech has become an important observation point for investors.

Independent market analyst Ross Norman said, "The recent bearish sentiment in the market is partly due to the technical overbought range of gold prices in the early stage, and the current bearish trend is dominating the market." Earlier this week, China and the United States reached a phased consensus and decided to mutually suspend some tariff measures for 90 days. This measure effectively alleviates market concerns about the escalation of the global trade situation and weakens the traditional appeal of gold as a safe haven asset.

Gold is usually favored as a means of preserving value during periods of geopolitical or financial market instability. Last month, driven by the continuous increase in holdings by the central bank and global trade uncertainty, gold prices briefly hit a historical high of $3500.05.

However, with the recent softening of economic data in the United States, especially the lower than expected consumer confidence index, concerns about slowing inflation and weakened consumer momentum have reignited in the market. The PPI data and retail sales, which will be released at 20:30 Beijing time on Thursday evening, will become key signals for determining the direction of the Federal Reserve's policy.

The market generally predicts that the annual PPI rate in the United States will fall to 2.5% in April, and retail sales may experience short-term gains due to the "rush" effect of tariffs. In this context, market participants maintain a wait-and-see attitude and avoid making directional bets on gold and the US dollar.

According to interest rate futures, investors expect the Federal Reserve to cut interest rates by 50 basis points this year and may adjust its policy path starting from October. Under low interest rate expectations, interest free assets such as gold usually benefit.

In addition, the temporary ceasefire in US China trade, smooth progress in US South Korea negotiations, and signs of easing US Iran relations are all suppressing market demand for safe haven, and gold is facing sustained downward pressure in the short term.

However, once geopolitical risks escalate again, such as the breakdown of negotiations between Russia and Ukraine, or unexpected data from the United States that falls short of expectations, the market may quickly shift towards safe haven assets such as gold, and gold prices are expected to receive support.

On the other hand, the issue of the US fiscal deficit also poses a potential support for gold. Data shows that in the first seven months of fiscal year 2025, the US budget deficit reached $1.049 trillion, with an annual growth rate of 23%, raising concerns in the market about the sustainability of US bonds.

In terms of technical analysis, the gold daily chart shows that the gold price continues to be below the 21 day moving average ($3308), indicating a short-term bearish technical outlook. We are currently testing key support - the 50 day moving average ($3155). The Relative Strength Index (RSI) remains around 44, indicating that the downside space has not been fully released.

If the support of $3155 remains stable, the gold price is expected to rebound, with a preliminary target of $3308, further testing the trend line resistance level of $3419. But if it falls below the support of $3155, gold prices may initiate a new round of adjustment, with short-term targets pointing towards the psychological level of $3100 and the April low of $3072. If the decline continues, it may test the 100 day moving average of $2972.