Gold price falls below $3,320 as risk appetite improves on UK-US deal

• Gold is down nearly 4% in two days as US-UK trade deal boosts risk appetite and Dollar demand.
• DXY breaks above 100.00, up 0.85% to 100.71, weighing heavily on precious metals.
• Fed holds steady and Powell signals patience while traders await fresh commentary from central bank officials on Friday.

Gold price tumbled for the second consecutive day as traders erased Bullion's advance on Tuesday, which pushed its gains past the $3,400 figure. The announcement of a US-UK trade deal boosted the US Dollar (USD) to the detriment of XAU/USD, which trades at $ 3,311, down over 1.60%.

An upbeat sentiment is taking its toll on Gold prices, which have declined by almost 4% over the last two days. The announcement of a trade deal between the US and the UK, made by President Donald Trump and UK Prime Minister Keir Starmer, has improved the market mood, as traders seem confident that the US could reach more agreements. Meanwhile, all eyes are on Saturday's meeting between the US and Chinese delegations in Switzerland to discuss tariffs.

The news alleviated concerns among investors seeking risk and drove US equity markets and the US Dollar higher, with both being bearish for the Gold market.

The US Dollar Index (DXY), which tracks the buck's value against a basket of six currencies, hurdled the 100.00 figure and is up 0.85% at 100.71, a headwind for the yellow metal.

Data-wise, the US economic docket revealed that the labor market remains solid, a relief for the Federal Reserve (Fed), which held rates unchanged on Wednesday. At the same time, Fed Chair Jerome Powell said he is in no rush to reduce interest rates.

On Friday, a slew of Fed officials would grab the headlines following the blackout period ahead of the May 7 monetary policy meeting.

Daily digest market movers: Gold retreats as US Treasury yields rise

• US Treasury bond yields are rising following the Fed's decision on Wednesday. The US 10-year Treasury note yield is up ten basis points at 4.375%. Meanwhile, US real yields are also up ten bps at 2.125%, as indicated by the US 10-year Treasury Inflation-Protected Securities yields.
• US macroeconomic data, as reported by the US Department of Labor, revealed that Initial Jobless Claims for the week ending May 3 increased by 228,000, down from the expected 230,000 and lower than the previous reading of 241,000.
• The World Gold Council revealed that central banks from China, Poland and the Czech Republic increased their Bullion reserves in April.
• The People's Bank of China (PBoC) added 2 tonnes to its Gold reserves in April - for the sixth consecutive month. The National Bank of Poland (NBP) increased 12 tonnes in April to 509 tonnes; while the Czech National Bank increased its reserves by 2.5 tonnes in April.
• Swap markets have so far priced in the Fed's first 25 basis points (bps) rate cut for the July meeting, and they expect two additional reductions towards the end of the year.

XAU/USD technical outlook: Gold price trips and plunges below $3,400

Gold price rally paused as the yellow metal retreated below the $3,400 figure and opened the door for a prolonged fall of over 1.60% or $50 US dollars. Momentum indicates buyers are losing steam, as depicted by the Relative Strength Index (RSI). This is negative for the non-yielding metal, which is at the brink of diving below $3,300, which could exacerbate a fall toward the May 1 cycle low of $3,202.

Conversely, if Gold climbs past $3,350, this could push XAU/USD back toward $3,400.