Gold price retreats after record highs as market faces profit-taking and US-China trade tensions

In recent trading sessions, gold prices (XAU/USD) have shown a notable withdrawal from the unprecedented record high of $3,245 achieved earlier in the week, settling around the $3,220 mark. This slight decline comes as investors take profits amidst an optimistic tone in equity markets and a daily chart that suggests gold may be slightly overbought. Despite this, any significant downturn appears unlikely due to escalating tensions in US-China trade negotiations, which continue to provide a supportive backdrop for gold as a safe-haven asset. Market sentiment is currently swayed toward the belief that the Federal Reserve will soon embark on a rate-cutting cycle, potentially implementing up to three reductions in the coming year. This anticipated easing of monetary policy appears to be keeping the US Dollar (USD) subdued, hovering near its lowest values since April 2022. Consequently, gold remains buoyed, limiting the extent of its downside potential. Investors are advised to tread carefully as further declines might be viewed as buying opportunities, particularly near the $3,200 benchmark and aligning support in the $3,168-3,167 range known for its resilience. From a technical standpoint, the daily Relative Strength Index (RSI) suggests that the market is entering an overstretched phase. A strategic wait for consolidation or a modest pullback could be prudent prior to additional positioning on the upside. Identifying a trustworthy broker for gold trading remains essential, given the market's volatility and risks involved. Moreover, related currency pairs such as EUR/USD and GBP/USD show a contrasting trend as they benefit from robust sentiments, indicating a complicated global financial landscape. Wall Street's recent surge following Trump’s tariff concession news, while welcomed, is tempered by existing trade tensions, which keep the potential for economic downturns at the forefront of investors' minds. This convoluted situation poses both challenges and opportunities in the gold market, compelling investors to remain agile and informed.