12 May 2025,00:24
Daily Market Analysis
12 May 2025, 00:24
Key Takeaways:
*Dollar Index rallies on renewed optimism after US-China trade deal signals
*Gold prices fall sharply as safe-haven demand weakens amid easing geopolitical tensions.
Global risk appetite strengthened significantly as geopolitical tensions showed signs of easing, particularly between the United States and China. The White House announced that a trade agreement with China had been reached, although specific terms were not disclosed. U.S. Trade Representative Jamieson Greer emphasized that discussions were “very constructive” and suggested that the differences between both parties may not have been as significant as previously perceived. Both Greer and senior advisor Bessent confirmed that President Donald Trump was fully briefed on the discussions.
While market participants await further clarity on the deal, the announcement marked a notable de-escalation in the ongoing US-China trade war—a key source of global economic uncertainty in recent years. Optimism surrounding the development boosted global equities and weakened demand for traditional safe havens.
Simultaneously, geopolitical tensions in South Asia have eased modestly. U.S. President Donald Trump announced that India and Pakistan had agreed to a full and immediate ceasefire following several days of cross-border military strikes. Although the truce was short-lived—India reported renewed shelling in Srinagar shortly after the announcement—it nonetheless contributed to a reduction in near-term geopolitical risk in the region.
In FX markets, the U.S. Dollar Index (DXY) surged, extending its rally as investors priced in improved trade prospects. The index was buoyed not only by the U.S.-China development but also by expectations of broader U.S. trade deals, potentially including India and the United Kingdom.
The improving global sentiment and unwinding of risk-off positions have triggered a sharp pullback in gold prices, as investors rotated out of safe-haven assets.
The Dollar Index has extended its rally after breaking above the prior resistance at 100.30, now acting as a near-term support level.
A bullish golden cross on the MACD and an RSI reading at 52 indicate a slightly bullish bias, with potential upside toward 101.90. A sustained move above this level could target the next resistance at 103.40.
Conversely, a loss of momentum may trigger a re-test of the 100.30 support area.
Resistance Levels: 101.90, 103.40
Support Levels: 100.30, 99.15
Gold is currently testing the support level at 3270.00. A successful breakout below this level could lead to a further decline toward the next support at 3205.00.
The MACD indicates increasing bearish momentum, reinforcing downside risk. However, the RSI at 31 suggests the metal is approaching oversold territory, raising the likelihood of a technical rebound.
If support holds, prices may consolidate between 3270.00 and 3345.00.
Resistance levels: 3345.00, 3410.00
Support levels: 3270.00, 3205.00
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