empty
12.05.2025 11:00 AM
Has Common Sense Prevailed? (High probability of #SPX growth and a drop in gold prices)

On Monday, the United States announced "significant progress" in trade talks with China following a two-day meeting in Switzerland over the weekend. Markets reacted to this news with a gap-up in futures trading on stock indices and a decline in gold prices.

The prospect that the trade war between Washington and Beijing may end soon is clearly positive. As the world's two largest economies move toward a new trade agreement, global economic tensions, which had threatened to trigger a serious downturn with all its negative consequences, are expected to ease considerably. In this situation, it doesn't matter who "outplayed" whom—Trump or Xi. What's important is that the prospect of ending the trade war, even just its acute and visible phase, is already a positive factor. In my view, this could lead to a noticeable rise in stock prices and a weakening of gold prices, which had previously been actively bought as a safe haven asset.

If the U.S. and China are moving toward resolving trade disputes, that is a clear signal for a rally in stock indices, which may soon retest their February highs.

It is also worth noting that the U.S. dollar remains above the 100.00 mark on the ICE index. What is supporting it? Primarily, it's the Federal Reserve's stance, as outlined last week by Jerome Powell, which is essentially to adopt a wait-and-see approach and avoid premature decisions on interest rates. This policy, along with the potential "peace treaty" in trade, supports the dollar by eliminating, for now, the risk of the U.S. economy sliding into a recession, a key factor that had previously weakened the dollar in the forex market.

At the same time, inflation is falling in the eurozone, the UK, and other major economies, except Japan, where interest rate hikes are expected. This could force local central banks to continue easing monetary policy, which would temporarily pressure the euro, pound, and other currencies against the U.S. dollar.

U.S. consumer inflation data will be released this week. Both headline and core figures are expected to rise month over month and maintain the current pace year over year. If so, this could cause a limited pullback in the dollar, though likely not a significant one, as the Fed is not expected to react to this data immediately. Instead, it will wait for a more noticeable decline toward the 2% target before resuming rate cuts.

What to expect in markets today:

The news about the U.S.–China negotiations will continue to support demand for equities. Gold prices may continue to fall toward $3210.00. The dollar may also receive limited support. As for cryptocurrencies, demand may weaken due to capital flows shifting toward stocks. Overall, we can expect the start of the trading week to be optimistic on the wave of revived common sense.

This image is no longer relevant

This image is no longer relevant

Forecast of the Day:

#SPX

The SP 500 futures CFD began trading with a gap on news of progress in U.S.–China talks. Most likely, growth will continue toward 5873.00 and 5983.00 amid increased demand for equities. This trend may strengthen after breaking above the 5786.00 resistance line. A good entry point for buying could be 5750.57.

GOLD

Gold prices are declining amid dollar strength and progress in the U.S.–China negotiations. Given this, further decline toward 3210.00 is expected. The trend may intensify after breaking the 3262.00 support line. A potential sell level could be around 3271.00.

Pati Gani,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Viktor Vasilevsky
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Market fears nothing

The S&P 500 reached another all-time high, with rotation being the hallmark of the US equity market. Investors are aggressively buying up stocks that underperformed in the first half

Marek Petkovich 10:50 2025-07-11 UTC+2

What to Watch for on July 11th? A Fundamental Overview for Beginners

There are very few macroeconomic publications scheduled for Friday, but the volume is still greater than on any previous day this week. The UK will release GDP and industrial production

Paolo Greco 08:50 2025-07-11 UTC+2

GBP/USD Overview on July 11, 2025

The GBP/USD currency pair failed to consolidate above the moving average on Thursday, so the correction continues for now. Throughout Thursday, the GBP/USD pair was unable to hold above

Paolo Greco 07:15 2025-07-11 UTC+2

EUR/USD Overview on July 11, 2025

The EUR/USD currency pair spent Thursday calmly drifting lower. We continue to wait for the current correction to end and for the uptrend to resume. To be fair, this correction

Paolo Greco 07:08 2025-07-11 UTC+2

XAU/USD. Analysis and Forecast

Gold prices are maintaining positive momentum for the second consecutive day. Ongoing uncertainty surrounding U.S. President Donald Trump's trade policy and its impact on the global economy continues to weigh

Irina Yanina 19:24 2025-07-10 UTC+2

USD/CHF. Analysis and Forecast

Today, the USD/CHF pair retraced part of its decline from a new weekly low recorded during the Asian session and has temporarily paused its downward movement, stopping short

Irina Yanina 12:26 2025-07-10 UTC+2

Market dupes sellers

The split within the Federal Reserve, NVIDIA's successes, and a successful auction of 10-year US Treasury bonds allowed the S&P 500 to ignore the tariff chaos. Donald Trump announced tariffs

Marek Petkovich 12:02 2025-07-10 UTC+2

What to Watch on July 10th: Fundamental Event Overview for Beginners

Macroeconomic Report Analysis: There are very few macroeconomic publications scheduled for Thursday, and none of them are expected to be significant. So what could traders focus on today? The second

Paolo Greco 09:07 2025-07-10 UTC+2

GBP/USD Overview on July 10, 2025

On Wednesday, the GBP/USD currency pair maintained its downward movement, which is corrective in nature and could end at any moment. The price remained below the moving average line

Paolo Greco 07:26 2025-07-10 UTC+2

EUR/USD Overview on July 10, 2025

The EUR/USD currency pair continued to trade very calmly on Wednesday. The pair maintained a slight downward bias, as we've noted in all of our recent articles. However, the current

Paolo Greco 07:16 2025-07-10 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.