Spot gold came under pressure on Thursday, falling 1.8% to close at $3,288 an ounce, marking its second straight day of losses. The main driver behind the weakness in gold prices was a rebound in market risk appetite, which dampened demand for safe-haven assets.

Leading the decline was news surrounding a potential fast-track trade agreement between the U.S. and the U.K. President Trump hinted on social media that a “major trade deal” with the U.K. was nearing completion, with market expectations pointing toward possible tariff cuts and enhanced trade collaboration. This development helped ease some of the uncertainty in global trade over the short to medium term and triggered a shift of capital flows toward equities and the U.S. dollar—putting downward pressure on gold.

On the other hand, news from China provided a modest counterbalance. The People’s Bank of China has reportedly allowed select major commercial banks to use foreign currency reserves to purchase imported gold. This move is seen as a loosening of policy and could point to increased official demand for gold reserves in the future. However, the market reaction was muted, and with risk-on sentiment prevailing, it wasn’t enough to support prices in the short term.

Geopolitical tensions between India and Pakistan also resurfaced. Reports suggest Pakistan shot down several Indian drones for allegedly violating its airspace, prompting retaliatory airstrikes from India. While the situation hasn’t sparked broad-based haven flows just yet, any escalation could spur renewed interest in gold.

From a technical standpoint, spot gold has been trading in a narrow range between $3,220 and $3,350 over the past two days. Immediate support is seen around $3,290; a break below that could open the way toward $3,250. Conversely, should the market interpret the U.S.-U.K. trade agreement negatively or if the Fed adopts a more dovish stance, a push toward the $3,400 resistance level could be in play.

Investors will be monitoring the official announcement on the U.S.-U.K. trade deal, expected at 9 p.m. Hong Kong time, as well as a speech from Federal Reserve Chair Jerome Powell at 2:30 a.m. tomorrow, which may shed further light on the interest rate outlook. Additionally, trading patterns on the first full session after China’s Labor Day holiday could provide insight into regional capital flows—something Asia-based investors will want to keep an eye on.

(The above content is based on publicly available market information and does not constitute investment advice.)