During Friday’s North American trading hours, the price of gold (XAU/USD) fell to nearly $3,280, following a strong upward movement the previous day. Despite renewed trade tensions between the US and China, the US Dollar (USD) gained strength, putting pressure on the yellow metal.
The US Dollar Index (DXY), which measures the value of the USD against six major currencies, rose to around 99.60. This typically makes gold a less attractive investment for investors.
In a post on Truth.Social, President Donald Trump stated that China has violated their trade agreement, adding to the already heightened geopolitical tensions. Historically, during times of increased political tensions, demand for safe-haven assets like gold tends to rise.
The US Dollar (USD) was already stable after the US Court of Appeals suspended a federal trade court’s decision to ban most of the tariffs announced by President Trump. This decision potentially diminished hopes of permanently invalidating import duties.
Last Wednesday, the US Court of International Trade declared most of Trump’s tariffs as “illegal,” stating that the large trade imbalances do not constitute a “national emergency” under the International Emergency Economic Powers Act (IEEPA). Under this law, Trump imposed reciprocal tariffs on his trading partners, a fentanyl duty on China, Canada, and Mexico, and border negligence levies on his North American counterparts.
The price of gold continues to struggle near the upward-sloping trendline on a daily timeframe, currently around $3,335, which was drawn from the high of $2,726 on December 12. The short-term trend of the precious metal is uncertain as it hovers around the 20-day Exponential Moving Average (EMA) at around $3,290.
The 14-day Relative Strength Index (RSI) is showing indecision among market participants as it remains within the range of 40.00-60.00.
Looking ahead, the key resistance for gold will be around the May 7 high of $3,440. On the downside, the key support level will be the May 15 low of $3,120.