Gold prices declined on Friday as the US Dollar made a modest recovery despite a decrease in US Treasury bond yields due to a strong inflation report. This gave hope to traders that the Federal Reserve (Fed) may ease monetary policy in 2025. XAU/USD traded at $3,289, down 0.83%. The market sentiment turned negative after US President Donald Trump expressed dissatisfaction with China for not fulfilling their previously negotiated agreement. In a tweet, Trump stated that China had violated the agreement and questioned their integrity. As a result, US equity markets dropped, and the US Dollar rebounded from its daily lows, according to the US Dollar Index (DXY).
In other trade-related news, a US Federal Appeals Court upheld most of Trump’s tariffs imposed on April 2, known as “Liberation Day,” after a previous decision by the US Court of International Trade had blocked the duties for being deemed illegal. Additionally, the US Core Personal Consumption Expenditures (PCE) Price Index decreased in April compared to March, and the University of Michigan’s (UoM) Consumer Sentiment in May’s final reading improved while inflation expectations decreased.
Despite the overall uptrend in gold prices, a close below $3,300 could result in consolidation within the $3,250-$3,300 range without any significant market-moving events before the weekend. To further resume the bearish trend, a break below $3,250 and the 50-day Simple Moving Average (SMA) at $3,221 will open the door for a potential decline towards the April 3 high at $3,167. On the other hand, if buyers manage to push XAU/USD above $3,300, the next key resistance levels to watch are $3,350, $3,400, the May 7 swing high of $3,438, and the record high of $3,500.