Gold Drops Sharply as Trade Progress and Middle East Ceasefire Ease Market Fears
Gold prices dropped over 1.50% on Friday as investors showed more confidence in the market. This shift was influenced by several factors, including the easing of tensions between Israel and Iran, a new trade agreement with China, and ongoing talks between the United States and other countries to reach commercial deals. Investors, who had been seeking safety in gold, welcomed these developments.
Currently, the price of gold (XAU/USD) stands at $3,274, having reached a high of $3,328 earlier in the day. On Thursday, the White House announced the formal signing of a trade agreement between the US and China, marking the end of their trade conflict. US Commerce Secretary Howard Lutnick mentioned that more deals could be on the way as the July 9 deadline gets closer.
- Ceasefire Agreement Between Israel and Iran/Gaza:
- A major geopolitical risk factor faded as reports confirmed a U.S.-brokered ceasefire between Israel and Iran, with Tehran showing flexibility toward forming a regional nuclear consortium. The news significantly cooled safe-haven demand.
- US-China Trade Deal Signed:
- The White House formally announced the end of the trade war with China. Commerce Secretary Howard Lutnick also suggested that additional trade deals with the EU, South Korea, and Vietnam are expected soon.
- Gold Technicals Turn Bearish in the Short Term:
- Gold has broken below the 50-day SMA ($3,323), and momentum indicators, such as the RSI, are turning negative. A continued drop toward $3,245 or even $3,200 looks possible unless prices reclaim $3,300.
Despite the selloff, the longer-term uptrend remains intact due to persistent inflation risks and global uncertainty.
Dollar Index (DXY) Weakens Amid Inflation Surprises and Personal Spending Drop
The US Dollar Index (DXY) is nearing 97.00 support as investors digest mixed inflation and consumption data. Friday’s core PCE data served as a catalyst for further weakness.
- Core PCE (May): +0.2% MoM (above 0.1% est.), +2.7% YoY (above 2.6% in April)
- Headline PCE: +0.1% MoM, +2.3% YoY — both in line with expectations
- Personal Income: −0.4% (vs. +0.3% est.)
- Personal Spending: −0.1% (vs. +0.1% est.)
Despite sticky inflation, the drop in Income and Spending suggests economic cooling. President Trump is reportedly pushing for rate cuts, further complicating the Fed’s decision-making. Yields on US 10-year Treasuries are flat at 4.242%.
Technical View:
- DXY is trading near 97.05, continuing its multi-month downtrend. A break below 97.00 could open the path toward 96.00, while any recovery would face resistance at 98.50 and 99.30.
Bitcoin Holds Steady as Ethereum Shows Signs of Technical Weakness
Bitcoin (BTC) is trading at approximately $107,000 as of Friday. The core Personal Consumption Expenditure (PCE) inflation data for May increased to 2.7%, surpassing the expected 2.6%. This higher inflation could decrease Bitcoin’s trading activity, as both spot and futures volumes have dropped recently, showing that traders are less interested.
The US core PCE data for May has exceeded expectations, increasing by 2.7% over the past year. Each month, the core PCE rose by 0.2%, which is above the analysts’ predictions, while the headline PCE increased by 0.1%.
The rise in inflation may cause the Federal Reserve (Fed) to maintain its cautious approach. PCE is the measure of inflation that the Fed prefers to use. This matches what Fed Chair Jerome Powell said on Tuesday before the House Financial Services Committee. He pointed out that the Fed is cautious about cutting rates, especially given the inflation risks posed by President Donald Trump’s tariffs on the economy.
Bitcoin held steady above $106,000 despite a slight decline in the broader cryptocurrency market following the release of the slightly hawkish inflation data.
The top crypto has continued to trade around the $100,000 and $110,000 price range amid a slowdown in network activity, with transfer volume dropping from its May peak of $76 billion to $52 billion in the past week, according to data from Glassnode.
“Currently, the market appears to be in a cool-down phase after the third significant wave of profit-taking, indicating that while large gains have been secured, momentum is now easing as realized profitability tapers off,” Glassnode wrote in a report on Thursday.
Ethereum (ETH) Under Pressure, ETH dips slightly as Trump ends Canada trade talks, but equities show strength.
Ethereum and most of the broader crypto market have been steady, while stocks rose on Friday, with the S&P 500 and Nasdaq Composite reaching all-time highs. This increase happened after Commerce Secretary Howard Lutnick announced that the US and China had completed a trade deal. However, both stock indexes lost some of those gains after President Trump said the US is ending trade talks with Canada.
Trump stated on Truth Social that Canada is a difficult trading partner. He highlighted that they have charged high tariffs on US dairy products and are now introducing a Digital Services Tax on American tech companies, which he called a direct attack on the US. He declared that due to this tax, the US would stop all trade discussions with Canada immediately. He also said Canada will learn about the new tariffs they will face for doing business with the US in the next week.
Following this announcement, Ethereum experienced a brief drop, falling below $2,400. Its popularity among investors also dropped to the lowest level since early March, when President Trump began discussing tariffs. This decrease suggests that investor confidence has declined compared to earlier in the month despite the ongoing ceasefire between Israel and Iran.
Altcoins: Sentiment Fades, Volume Drops
Despite the broader market stability, altcoins suffered losses as traders trimmed risk:
- Solana (SOL): Fell 4.1% to $122, pressured by declining volume and lack of developer activity.
- Avalanche (AVAX): Dropped below $26 as DeFi usage slowed significantly.
- Chainlink (LINK): Down 3.5% to $14.20, despite multiple new Oracle partnerships.
- Meme Coins: PEPE and DOGE both slipped by more than 5%, indicating a decline in retail interest.
The altcoin market cap dropped 3.2% this week, indicating a risk-off positioning amid macroeconomic shocks and uncertainty.
Conclusion: Cautious Optimism with Heavy Technical Risks
Markets welcomed the easing of geopolitical tensions and renewed trade optimism, but macroeconomic contradictions—strong inflation vs. weak consumer data—keep uncertainty high.
- Gold is correcting, but long-term support remains strong.
- The dollar is vulnerable but could bounce from support.
- BTC and ETH lack momentum, with Ethereum facing potential bearish acceleration.
- Altcoins are under pressure as risk sentiment fades.
Investors should brace for sideways action or corrective moves until either macroeconomic clarity emerges or key technical levels are broken decisively.
