🎯 Gold Prices Under Pressure as Risk Appetite Returns

The gold market has seen a notable pullback recently, with international gold prices sliding to their lowest level in a week on May 12. The shift comes as investor appetite for risk rebounds, reducing demand for safe-haven assets like gold. Contributing factors include positive momentum in U.S.-China trade talks, easing geopolitical tensions, and a stronger U.S. dollar—all combining to create downward pressure on gold.

One key catalyst was the recent round of trade negotiations held in Geneva between Washington and Beijing. Market sources suggest both sides reached a preliminary compromise on tariffs, with plans to begin phasing out some trade restrictions over the next 90 days. This development has helped ease economic uncertainty, encouraging more risk-taking. As a result, gold prices fell sharply—dropping more than 2% from the May 11 peak and briefly breaking below the $3,250 per ounce technical support level.

At the same time, the U.S. dollar has been gaining strength since the start of the month. Buoyed by solid U.S. economic data and a steady hawkish stance from the Federal Reserve, the dollar index hit recent highs. Analysts note that as markets increasingly expect the Fed to hold current monetary policy steady, global funds are shifting back into dollar assets—pulling capital away from gold and dragging prices lower.

Geopolitical tensions that had been a growth concern also appear to be stabilizing. India and Pakistan have officially agreed to a full ceasefire, and Russia and Ukraine are set to begin direct talks in Turkey. While outcomes remain uncertain, these developments have helped calm market nerves. With geopolitical risks in retreat, gold’s short-term appeal as a hedge has weakened.

Looking ahead, markets are closely watching upcoming U.S. inflation data and fresh commentary from Fed officials on the interest rate outlook. Strong economic surprises or breakthroughs in negotiations could push gold lower, while renewed inflationary pressure might offer support and revive investor interest. All eyes are on the key support level of $3,195 per ounce—holding that line could help gold preserve its gains so far this year.

In short, gold sits at a crossroads. While selling pressure is intensifying in the short term as risk sentiment improves, long-term trends will depend on broader economic indicators and policy direction. For diversified investors, gold still holds a strategic role—but caution is warranted as we navigate the next phase of the market.