Daily Price Outlook
Gold prices faced renewed selling pressure on Friday, driven by a positive risk sentiment that undermined the appeal of safe-haven assets.
The precious metal, often seen as a refuge during times of uncertainty, struggled to maintain its value as optimism surrounding trade relations between the US and China gained momentum.
Additionally, the emergence of US Dollar (USD) buying further weighed on Gold prices, adding to the downward momentum for XAU/USD.
US-China Trade Optimism Drags on Safe-Haven Gold
However, the major factor behind the decline in Gold was growing optimism surrounding the US-China trade relations. US President Donald Trump indicated that trade talks between the two largest economies were progressing, raising hopes of a potential de-escalation in the trade war.
This sentiment was further fueled by reports that China might suspend its 125% tariff on some US imports, despite China's Foreign Minister denying any ongoing negotiations. The market optimism regarding a resolution of trade tensions between the two nations has acted as a headwind for the safe-haven Gold price.
Geopolitical Risks and Fed's Rate Cut Expectations Offer Some Support
Despite the positive risk-on sentiment, several factors helped limit the decline in Gold prices. This include geopolitical risks, particularly the ongoing Russia-Ukraine war.
The recent missile attack on Ukraine’s capital Kyiv, which resulted in multiple casualties, underscored the continued volatility in the region, preventing a sharp drop in Gold prices.
Moreover, the possibility of aggressive monetary policy easing by the Federal Reserve (Fed) provided some caution before placing further bearish bets on Gold.
The Fed's stance on potential interest rate cuts, as suggested by Cleveland Fed President Beth Hammack, remained a significant factor for market participants.
The prospect of multiple rate cuts by the end of the year kept some traders from betting too heavily against Gold, with investors awaiting further developments on the Fed’s policy actions.
US Dollar Strength Weighs on Gold Prices
On the US front, the US Dollar (USD) garnered some strength, driven by stronger-than-expected US economic data. Notably, the Department of Labor’s report on Initial Jobless Claims showed modest increases to 222,000 for the week ending April 19, indicating a resilient labor market.
Meanwhile, Durable Goods Orders surged 9.2% in March, surpassing expectations and adding to the positive tone around the US economy.
These data points provided the USD with upward momentum, further pressuring Gold prices, which are inversely correlated with the USD.
Looking ahead, traders are likely to continue monitoring trade-related developments and broader risk sentiment for short-term trading opportunities in the XAU/USD pair.
In the meantime, the release of the revised Michigan US Consumer Sentiment Index and potential updates on US-China trade talks will be key catalysts for market movements.
GOLD (XAU/USD) – Technical Analysis
Gold prices are under pressure as they flirt with a critical breakdown below the $3,316 support zone, following a textbook lower high rejection around $3,342.
The market is tracing a descending triangle, defined by falling highs and a flat base near $3,314, reinforcing bearish sentiment. The 50-period EMA at $3,367 has turned decisively downward, acting as dynamic resistance, and capping intraday rallies.
A sequence of spinning tops and Doji candles formed along the descending trendline—most recently at $3,342—signals market indecision and exhaustion of buying momentum.
Notably, the failure to breach this zone confirms the pattern of lower highs, supported by a short-lived three white soldiers pattern that reversed into a bearish engulfing candle.
Adding weight to the bearish case is the RSI, which currently sits at 42.41. A clear bearish divergence emerged earlier this week, as prices posted higher highs while RSI made lower highs—often a prelude to deeper pullbacks. A crossover below the 50-level confirms the shift toward downside momentum.
If gold breaks below $3,316 on strong volume, it may open the path to $3,260 and possibly $3,228. Key trendline support drawn from the April 10 low coincides with this confluence zone, making it the next battleground for bulls.
However, a sharp move above $3,357 would invalidate the short setup and could pave the way for a retest of $3,386.
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