The recent agreement between the United States and China to significantly reduce tariffs has had profound implications for global financial markets, particularly for the price of gold. In a surprise move, both nations announced temporary reductions in tariff rates for a 90-day period.

As a result of this announcement, gold prices plummeted over 3% at the opening of the European trading session, falling to approximately $3,231 per ounce. This decline is part of a broader downward trend, with gold having lost more than 8% from its record high of $3,500, reached on April 21. The abrupt reallocation of capital into riskier assets has effectively brought an end to the gold rally that had characterized much of April and early May. Safe-haven exodus leads Gold to break vital supports before technically ending the rally. 

Amid this market euphoria, U.S. Treasury Secretary Scott Bessent emphasized that neither country desires a long-term decoupling. He further expressed interest in China opening its markets more broadly to U.S. goods, even suggesting the possibility of a formal purchasing agreement. These comments underscore a renewed spirit of cooperation between the two economic superpowers, contributing further to the risk-on sentiment prevailing in markets.

From a technical standpoint, gold is facing significant pressure. Analysts suggest that the current drop could be just the beginning of a more extended decline, with the potential for prices to fall below $3,200. If the support level around $3,245 is breached, a further descent toward $3,167 is anticipated—effectively erasing most of the gains from April and May. Conversely, for gold to re-establish upward momentum, it would need to overcome a series of resistance levels: first reclaiming $3,284, then $3,315 (the daily pivot), followed by $3,356 (R1 resistance), and finally $3,388 (R2 resistance), before any retest of the all-time high becomes feasible.