Gold Price Forecast: XAU/USD holds below $3,350 on firmer US Dollar, easing US-China trade tensions

• Gold price declines to near $3,335 in Tuesday's early Asian session. 
• Improved optimism over a US-China trade deal undermines the Gold price. 
• Fed rate cut bets might help limit the XAU/USD's losses. 

The Gold price (XAU/USD) loses ground to around $3,335 during the early Asian session on Tuesday. The yellow metal edges lower amid a modest rebound of the US Dollar (USD) and a softening in tensions between the United States and China. 

China exempted some US imports from its 125% tariffs on Friday,  raising hopes that the trade war between the US and China is nearing an end, although China quickly knocked down US President Donald Trump's assertion that negotiations between the two countries were underway. 

US Treasury Secretary Scott Bessent said on Monday that the US government is in contact with China but that it's up to Beijing to take the first step in de-escalating the tariff fight with the US due to the imbalance of trade between the two nations. The easing fears of trade tension between the world's two largest economies reduce demand for traditional safe-haven assets like gold. Additionally, a stronger Greenback added further headwinds for the precious metal.

"Comments last week from the White House have fueled optimism that a US-China trade deal may eventuate, which has caused safe-haven demand for assets such as gold to subside," said Tim Waterer, Chief Market Analyst at KCM Trade.

On the other hand, rising expectations that the Federal Reserve (Fed) will resume its rate-cutting cycle in the June meeting could lift the non-yielding Gold price. Meanwhile, the Fed remains in blackout mode ahead of its Federal Open Market Committee (FOMC) meeting on May 7.

Traders will keep an eye on the preliminary US Q1 GDP report and April employment data this week, as it might offer some hints about the Fed's next policy decisions and the US economic outlook. The expectation for April is that the US economy will add 135,000 jobs and the Unemployment Rate will remain at 4.2%. If the reports show a weaker-than-expected outcome, this could drag the Greenback lower and boost the USD-denominated commodity price in the near term.