U.S.-China Trade Talks Dominate Sentiment

Key Takeaways:

• The market was focused on the U.S.-China new round of trade talks, which were extended to Tuesday.

• A positive tone from President Trump at the event hammered the safe-haven gold in the last session.

• Wall Street holds a “wait-and-see” mood, eyeing the trade talk outcome.

Market Summary:

The financial markets remained squarely focused on the latest round of U.S.-China trade talks held in London, where discussions centered on resolving bilateral export restrictions involving high-tech materials and rare earth elements. While both parties have yet to reach a mutual agreement, the negotiations are set to continue on Tuesday. Notably, President Trump struck an optimistic tone from the White House, acknowledging the challenges in dealing with China but emphasizing meaningful progress toward a potential deal.

The improved trade sentiment provided support for the U.S. dollar, which strengthened as risk appetite increased. Conversely, safe-haven assets came under pressure, with gold prices declining nearly 0.6% in the previous session as market participants shifted away from defensive positioning. Meanwhile, Wall Street exhibited caution, with major indices closing flat as investors adopted a wait-and-see approach ahead of further clarity on the trade discussions. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all stalled their recent upward momentum, reflecting the market's hesitation to price in optimism prematurely.

Looking ahead, market direction will likely hinge on developments from the ongoing negotiations. A constructive outcome could reignite the rally in U.S. equities and further bolster the dollar, while gold may face additional downside pressure if trade tensions ease. However, should talks stall, the potential resurgence of risk aversion could revive demand for safe-haven assets. Investors remain attuned to further updates, as the progress of these discussions is expected to set the tone for near-term market sentiment.

Technical Analysis:

XAUUSD, H4

Gold initially traded with a bullish tone, advancing in a promising uptrend. However, after filling the Fair Value Gap (FVG), the precious metal reversed course sharply, breaking below the FVG zone and shifting the technical bias to bearish.

Currently, gold is forming a series of lower highs — a classic indication of weakening upward momentum. A decisive break below the previous swing low near the $3,300.00 level would likely confirm the continuation of the bearish trend and open the door to further downside.

Momentum indicators align with this outlook. The Relative Strength Index (RSI) is gradually declining and approaching oversold territory, suggesting growing selling pressure. Meanwhile, the Moving Average Convergence Divergence (MACD) has crossed below the zero line, indicating the emergence of fresh bearish momentum.

Resistance levels: 3330.00, 3392.30

Support levels: 3267.00, 3210.00

Nasdaq, H4

The tech-heavy Nasdaq rose by 61.28 points, or 0.31%, in the latest session, marking a new three-month high and reinforcing a short-term bullish bias. However, despite this modest gain, signs of momentum fatigue are beginning to emerge, raising the possibility of a technical retracement in the near term.

The index appears to be losing upward steam, with limited follow-through buying. Should the Nasdaq retreat into its previous sideways consolidation range observed in recent sessions, it could serve as a signal of a potential pullback.

From a technical standpoint, the Relative Strength Index (RSI) remains above the neutral 50 level, indicating that bullish momentum is still present. However, the Moving Average Convergence Divergence (MACD) has been trending lower and is approaching the zero line, reflecting a waning bullish drive.

Overall, while the Nasdaq remains in a bullish posture, weakening momentum indicators suggest that a near-term consolidation or retracement cannot be ruled out.

Resistance levels: 22,180.00, 23,550.00

Support levels: 21,000.00, 20,150.00