During Friday’s North American trading hours, gold price (XAU/USD) managed to recover some of its initial losses and rebounded to nearly $3,305. However, it is still down by around 0.4%. This rebound was driven by renewed trade tensions between the US and China, as shown by President Donald Trump’s recent statement on Truth.Social claiming that Beijing has violated their trade agreement.
These tensions between the world’s two largest economies have increased the demand for gold price, as it is considered a safe-haven asset during times of geopolitical tension. The US Dollar (USD) also faced some pressure due to these trade worries, causing a slight recovery earlier in the day. The US Dollar Index (DXY), which measures the USD against major currencies, initially saw a significant decrease but has since risen by 0.08% to 99.40.
The USD gained ground after the US Court of Appeals suspended the federal trade court’s decision to ban most of the tariffs imposed by Trump, reducing hopes of the tariffs being permanently lifted. The US court of International Trade had previously declared the majority of Trump’s tariffs as “illegal”, stating that trade imbalances do not qualify as a “national emergency” under the International Emergency Economic Powers Act (IEEPA). Trump had used this law to impose reciprocal tariffs on all trading partners, a fentanyl duty on China, Canada and Mexico, and border negligence levies on North American partners.
Gold price is currently struggling near a rising trendline on the daily timeframe at approximately $3,335, which was formed from the December 12 high of $2,726. The short-term trend for gold is uncertain as it hovers around the 20-day Exponential Moving Average (EMA) at $3,290. The 14-day Relative Strength Index (RSI) is also fluctuating between 40.00-60.00, indicating indecision among traders.
In terms of future movements, the key resistance for gold price will be at the May 7 high of $3,440, while the crucial support zone lies at the May 15 low of $3,120.