U.S.-China Trade Talks Latest: Gold & JPY Under Short-Term Pressure, How Markets Interpret?
Fellow financial market participants, this week’s market sentiment has seen a shift influenced by new developments in U.S.-China trade talks, leading to a cautiously optimistic atmosphere. This optimism has fueled risk-on sentiment, simultaneously placing selling pressure on traditional safe-haven assets like gold and the Japanese Yen.
Market Overview: U.S.-China Talks Fuel Risk-on Sentiment
High-level delegations from both the U.S. and China are reportedly meeting in London, with U.S. officials hinting at a potential phone call between President Trump and President Xi. These signs have rekindled hopes for de-escalation of tensions. This diplomatic thaw has spurred a return of risk appetite across global equities and weighed on traditional safe-haven assets such as gold and the Japanese Yen.
Gold: Short-Term Performance & Structural Factors
Gold prices had rallied in recent months due to geopolitical uncertainty and inflation hedging demands. However, with improving risk sentiment, spot gold prices have retreated from recent highs near $3,400. Gold may continue to face pressure in the near term.
Nevertheless, the structural demand for gold as a long-term hedge and uncertainty buffer is unlikely to disappear. Furthermore, should the U.S.–China talks fail to produce tangible outcomes (e.g., a rollback in tariffs), market volatility could return, potentially re-energizing safe-haven demand for gold.
- Technical Outlook: Gold (XAUUSD)
Image Source: XAUUSD, 4-H Chart Analysis | Source: Ultima Market MT5 With resistance at $3400, the next key short-term level lies near $3,335, where gold may face another round of pullback toward the $3,250 region. The key structural support remains at $3,200.
Japanese Yen: Short-Term Pressure & Potential Rebound
The Japanese Yen, another key safe-haven asset, is also facing downward pressure recently. USDJPY has climbed back above 147.00 amid reduced demand for haven currencies. The Bank of Japan’s lack of aggressive moves in its tightening path has limited upside for Yen bulls.
However, this picture remains fragile. If markets begin to doubt the durability of the trade thaw—or if inflationary concerns flare up due to ongoing tariffs and supply chain disruptions—the Yen could quickly regain ground. A retreat in global equities or rising concerns over U.S. fiscal sustainability could also trigger a reversion to risk-off trades favoring the JPY.
- Technical Outlook: USDJPY
Image Source: USDJPY, 4-H Chart Analysis | Source: Ultima Market MT5 Technically, USDJPY is approaching the upper end of its recent range. If the pair breaches 145.00 with sustained momentum, it may test new cycle highs toward 146 or beyond. However, 146 remains a key resistance for now.
Summary Outlook:
While recent U.S.–China diplomacy offers hope, safe-haven assets like Gold and the Yen are in a holding pattern—facing near-term headwinds from improved sentiment but standing ready to rebound on any setback.
Investors are watching not just headlines, but concrete actions. A failure to deliver real policy clarity could swiftly reverse the risk-on tone and reassert demand for defensive assets. Until then, we are likely to see risk-on sentiment continue to fuel momentum in risk assets.
Author：Joshen Stephen｜Senior Market Analyst at Ultima Markets
Disclaimer
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