Gold price drifts lower for the third successive day on Friday amid a combination of negative factors.
The optimism over the US-UK trade deal and the US-China negotiations undermine safe-haven assets.
The Fed’s hawkish pause lifts the USD to a multi-week top and further weighs on the XAU/USD pair.
Gold price (XAU/USD) attracts some follow-through sellers for the third successive day on Friday and weakens further below the $3,300 mark during the Asian session. The US-UK trade deal raised hopes for more such deals with other countries and added to the latest optimism led by the announcement of US-China tariff negotiations. This remains supportive of a generally positive tone around the equity markets and is seen as a key factor undermining the safe-haven commodity. Meanwhile, the Federal Reserve's (Fed) hawkish pause lifts the US Dollar (USD) to a four-week top and further weighs on the non-yielding yellow metal.
However, geopolitical risks stemming from the Russia-Ukraine war, the escalation of tensions in the Middle East, and the India-Pakistan border could act as a tailwind for the Gold price. Traders might also refrain from placing aggressive bearish bets around the XAU/USD pair and opt to wait for headlines from the US-China trade talks. In the meantime, speeches from a slew of influential FOMC members will be looked for short-term opportunities later during the North American session. Nevertheless, the XAU/USD seems poised to register modest gains for the first time in three weeks.
Daily Digest Market Movers: Gold price is pressured by fading safe-haven demand and hawkish Fed-inspired USD strength
US President Donald Trump and British Prime Minister Keir Starmer announced a limited bilateral trade deal on Thursday that leaves in place a 10% tariff on goods imported from the UK. Adding to this, US Commerce Secretary Howard Lutnick told CNBC that Washington will roll out dozens of trade deals over the next month, though a 10% tariff imposed on most countries will likely stay.
Furthermore, the Trump administration is reportedly considering lowering the tariffs on China to 50% from 145% as soon as next week, which adds to the market optimism and might cap the XAU/USD pair. US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer are set to meet their Chinese counterparts in Switzerland on Saturday to discuss trade and economic issues.
The Federal Reserve indicated on Wednesday that it is not leaning towards cutting interest rates anytime soon despite the increasing uncertainty about the economic outlook. This allows the US Dollar to build on its recent bounce from a multi-year low and climb to a four-week top during the Asian session on Friday, and contributes to driving flows away from the non-yielding Gold price.
Russia and Ukraine both reported attacks on their forces on the first day of a three-day unilateral ceasefire called by Russian President Vladimir Putin. Furthermore, Israel’s escalation with Iran-backed Houthis in Yemen and fears of a wider military conflict along the India-Pakistan border keep geopolitical risks in play. This, in turn, could lend some support to the safe-haven precious metal.
A slew of influential FOMC members are due to speak on Friday. Investors will look for more cues about the Fed's future rate-cut path, which, in turn, will play a key role in driving the USD demand and provide a fresh impetus to the commodity, which remains on track to post modest weekly gains.
Gold price could find some support near the $3,265-3,264 area before extending a three-day-old downtrend
From a technical perspective, the overnight breakdown through the $3,260 resistance-turned-support and the subsequent slide below the $3,300 mark on Friday favors the XAU/USD bears. However, oscillators on the daily chart – though they have been losing traction – are yet to confirm the negative bias. This, in turn, warrants some caution before positioning for deeper losses and suggests that the Gold price could find some support near the $3,265-3,264 horizontal zone. Some follow-through selling, however, should pave the way for a fall towards the $3,223-3,222 intermediate support en route to last week's swing low, around the $3,200 neighborhood.
On the flip side, the Asian session high, around the $3,324 region, now seems to act as an immediate hurdle. Any further move up could attract some sellers and cap the Gold price near the $3,360-3,365 static resistance. A sustained strength beyond the latter should allow the XAU/USD pair to reclaim the $3,400 mark and climb further towards the next relevant hurdle near the $3,434-3,435 area, or the weekly swing high.
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