- Gold price regains positive traction following Thursday’s late pullback from a multi-week high.
- The US-China trade talks optimism might hold back the XAU/USD bulls from placing fresh bets.
- A modest USD uptick might contribute to capping the commodity ahead of the US NFP report.
Gold price (XAU/USD) sticks to modest intraday gains heading into the European session on Friday, though it lacks strong follow-through buying and remains below the $3,400 mark, or a multi-week top touched the previous day. The US Dollar (USD) gains some positive traction and moves away from its lowest level since April 22 set on Thursday amid repositioning trades ahead of the crucial US Nonfarm Payrolls (NFP) report. Apart from this, a generally positive risk tone and hopes for the resumption of US-China trade talks act as a headwind for the safe-haven precious metal.
Investors, however, remain on edge on the back of US President Donald Trump’s rapidly shifting stance on trade policies. Apart from this, persistent geopolitical risks stemming from the protracted Russia-Ukraine war and conflicts in the Middle East might keep a lid on any optimism in the markets. Furthermore, concerns about the worsening US fiscal situation and bets that the Federal Reserve (Fed) will lower borrowing costs further in 2025 might hold back the USD bulls from placing fresh bets. This, in turn, should continue to support the non-yielding Gold price heading into the key data risk.
Daily Digest Market Movers: Gold price lacks bullish conviction amid modest USD strength, trade optimism
- US President Donald Trump and Chinese leader Xi Jinping agreed to further talks to settle trade disputes. Moreover, Trump said that the call was focused almost entirely on trade and resulted in a very positive conclusion, triggering an intraday pullback in the Gold price from over a four-week high on Thursday.
- The initial market reaction, however, turns out to be short-lived on the back of Trump’s rapidly shifting stance on trade policies. Adding to this, some repositioning trade ahead of the US Nonfarm Payrolls (NFP) report assists the XAU/USD pair to regain some positive traction during the Asian session on Friday.
- The impactful US monthly employment data is expected to show that the world’s largest economy added 130,000 new jobs in May following the stronger-than-expected 177,000 rise recorded in the previous month. Meanwhile, the Unemployment Rate is anticipated to hold steady at 4.2% during the reported month.
- A host of other employment readings released this week pointed to a cooling in the US labor market, which should give the Federal Reserve more impetus to cut interest rates. Traders are currently pricing in the possibility that the US central bank will deliver at least two 25 basis points rate cuts by the year-end.
- However, recent comments from a slew of Fed officials suggested that the US central bank might stick to the wait-and-see approach amid persistent trade-related uncertainties. Hence, the crucial US employment details will be looked upon for fresh insight into the Fed’s policy outlook and drive the US Dollar.
Gold price technical setup favors bullish traders; sustained move beyond the $3,400 mark awaited
From a technical perspective, the top boundary of a multi-day-old range, around the $3,400 round figure, now seems to have emerged as an immediate barrier. Given that oscillators on the daily chart are holding in positive territory, a sustained strength beyond the said handle will be seen as a fresh trigger for bulls. The subsequent move-up could lift the Gold price to the $3,433-3,435 intermediate hurdle en route to the $3,500 neighborhood, or the all-time peak set in April.
On the flip side, the $3,334-3,333 area, or the lower end of the range, might continue to protect the immediate downside. Some follow-through selling, leading to a subsequent slide below the $3,326-3,324 horizontal resistance breakpoint, now turned support, could drag the Gold price below the $3,300 round figure, to the $3,286-3,285 region.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.