After initially declining, the price of gold (XAU/USD) shows some recovery during North American trading hours on Friday, edging closer to $3,305. However, it is still down by approximately 0.4%. The recent upswing in trade tension between the United States (US) and China, sparked by a post on Truth.Social by President Donald Trump claiming that China has violated their trade agreement, has led to a rebound in the value of the precious metal. This is in line with historical trends, as demand for safe-haven assets like gold tends to increase during times of heightened geopolitical tension.
As a result of the renewed trade tensions between the world’s two largest economies, the US Dollar (USD) has faced some pressure, causing it to initially drop during the day. However, the US Dollar Index (DXY), which measures the USD against six major currencies, has managed to bounce back and is currently up by 0.08% at 99.40. This is partially due to the US Court of Appeals suspending the federal trade court’s decision to ban the majority of tariffs announced by President Trump, thus lowering hopes for a full invalidation of import duties.
The US court had previously deemed these tariffs as “illegal” and stated that they did not constitute a “national emergency” under the International Emergency Economic Powers Act (IEEPA). Using this law, President Trump has imposed reciprocal tariffs on all of the US’s trading partners, as well as specific duties on China, Canada, Mexico, and other North American peers.
On a daily timeframe, the price of gold continues to face resistance near an upward-sloping trendline around $3,335, which has been in place since December 12 when the precious metal was valued at $2,726. Its short-term trend is currently uncertain as it hovers around the 20-day Exponential Moving Average (EMA) near $3,290. The 14-day Relative Strength Index (RSI) is also displaying mixed signals, fluctuating between 40.00 and 60.00, indicating indecisiveness among traders.
Looking ahead, the key resistance for gold can be found at its May 7 high of $3,440, while its May 15 low at $3,120 will serve as a crucial support level.