- Gold price bulls seem reluctant as a positive risk tone undermines demand for safe-haven assets.
- Thursday’s upbeat US macro data supports the USD, contributing to capping the precious metal.
- Geopolitical uncertainties and Fed rate cut bets should help limit losses for the XAU/USD pair.
Gold price (XAU/USD) attracts some sellers following an uptick to the $3,370-3,371 area during the Asian session on Friday and reverses a part of the previous day’s positive move. Hopes for a potential de-escalation of trade war between the US and China remain supportive of a positive risk tone, which, in turn, is seen undermining the safe-haven precious metal. Apart from this, the emergence of some US Dollar (USD) buying turns out to be another factor exerting downward pressure on the commodity.
Meanwhile, Federal Reserve (Fed) officials showed willingness for potential interest rate cuts, which might cap the USD upside and act as a tailwind for the non-yielding Gold price. Furthermore, persistent geopolitical uncertainties might further contribute to limiting the downside for the XAU/USD pair. Hence, it will be prudent to wait for strong follow-through selling before positioning for the resumption of this week’s corrective pullback from the $3,500 psychological mark, or the all-time peak.
Daily Digest Market Movers: Gold price is pressured by receding safe-haven demand
- Investors remain hopeful over the potential de-escalation of the US-China trade war, which acts as a headwind for the safe-haven Gold price during the Asian session on Friday. In fact, US President Donald Trump said on Thursday that trade talks between the US and China are underway.
- Moreover, China is reportedly mulling to suspend its 125% tariff on some US imports. This further points to signs of easing trade tensions between the world’s two largest economies and boosts investors’ confidence, contributing to driving flows away from the precious metal.
- The US Dollar draws some support from mostly upbeat US macro data released on Thursday. In fact, the US Department of Labor reported that Initial Jobless Claims increased modestly to 222,000 for the week ending 19 April and pointed to continued labor market resilience.
- The US Census Bureau reported that Durable Goods Orders surged 9.2% in March, beating the 2% forecast and marking a third consecutive rise. Transportation equipment also rose for a third month, surging 27%.
- Meanwhile, a duo of Federal Reserve officials discussed the willingness for potential interest rate cuts soon. In fact, Cleveland Fed President Beth Hammack stated that a rate cut as soon as June could be possible if clear and convincing data on economic direction is obtained.
- Separately, Fed Governor Christopher Waller said in a Bloomberg interview that he would support rate cuts if tariffs start weighing on the job market. Moreover, traders are still pricing in the possibility that the Fed will lower borrowing costs at least three times by the end of this year.
- On the geopolitical front, a Russian missile attack on Ukraine’s capital Kyiv killed at least twelve people and injured dozens. This was one of the deadliest strikes since Russia launched its full-scale invasion more than three years ago and keeps the geopolitical risk premium in play.
- Traders now look forward to the release of the revised Michigan US Consumer Sentiment Index. Apart from this, trade-related developments might influence the USD, which, along with the broader risk sentiment, might produce short-term trading opportunities around the XAU/USD pair.
Gold price bulls have the upper hand while above the $3,300 pivotal support
From a technical perspective, a goodish rebound from the weekly low touched on Wednesday stalls near the 23.6% Fibonacci retracement level of the latest leg up from the vicinity of the mid-$2,900s or the monthly swing low. The said barrier is pegged near the $3,368-3,370 region, which should now act as a key pivotal point. Given that oscillators on the daily chart are holding comfortably in positive territory, a sustained strength beyond should allow the Gold price to reclaim the $3,400 mark. The subsequent move up is likely to extend further towards the $3,425-3,427 intermediate hurdle, above which bulls could make a fresh attempt to conquer the $3,500 psychological mark.
On the flip side, weakness below the $3,330 area might still be seen as a buying opportunity and remain limited near the $3,300 mark, nearing the 38.2% Fibo. level. This is followed by the weekly swing low, around the $3,260 area, which if broken should pave the way for the resumption of this week’s rejection slide from the $3,500 mark, or the all-time peak. The Gold price could then accelerate the fall towards the 50% retracement level, around the $3,225 region, en route to the $3,200 mark. Some follow-through selling will suggest that precious metal has topped out and shift the near-term bias in favor of bearish traders.
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.
