Gold price oscillates in a range on Friday and stalls the overnight pullback from a two-week top.
US fiscal concerns, US-China trade tensions, and geopolitical risks underpin the XAU/USD pair.
Fed rate cut bets and USD selling support prospects for further gains for the precious metal.
Gold price (XAU/USD) lacks any firm intraday direction on Friday and seesaws between tepid gains/minor losses, around the $3,300 mark during the Asian session on Friday. The XAU/USD bears, however, seem reluctant to place aggressive bets and positioning for an extension of the previous day's pullback from over a two-week high on the back of US fiscal concerns. Apart from this, renewed US-China trade tensions and persistent geopolitical risks should continue to act as a tailwind for the safe-haven bullion.
Meanwhile, the initial market reaction to Thursday's mostly upbeat US economic data turns out to be short-lived amid worries about the deteriorating US fiscal condition. Adding to this, bets that the Federal Reserve (Fed) will cut interest rates further in 2025 fail to assist the US Dollar (USD) to capitalize on the previous day's move up and lend additional support to the non-yielding Gold price. Nevertheless, the XAU/USD pair seems poised to register its best weekly gain in more than a month and appreciate further.
Daily Digest Market Movers: Gold price draws support from sustained safe-haven buying and a weaker USD
The Republican-controlled US House of Representatives on Thursday narrowly passed President Donald Trump's sweeping tax and spending bill. Trump's dubbed “Big, Beautiful Bill”, which will add about $3.8 trillion to the federal government's debt over the next decade, now heads to the Senate for approval.
This comes on top of escalating US-China trade tensions, which have been fueling worries about the potential economic impact. Adding to this, the prospects for further policy easing by the Federal Reserve continue to undermine the US Dollar and assist the Gold price to stall the previous day's retracement slide.
On the economic data front, the US Department of Labor (DOL) reported on Thursday that the number of Americans filing for unemployment insurance fell to 227K last week. This pointed to a positive sign for the US labor market and the economy as a whole, which provided a modest lift to the US Dollar.
Meanwhile, S&P Global's flash estimate showed that the US economy saw a notable rebound in private sector activity in May and the Composite PMI rose to 52.1. Moreover, the US flash Manufacturing PMI increased to 52.3 in May – the highest in three months – and the Services PMI reached a two-month high of 52.3.
Trump reportedly told European leaders that Russian President Vladimir Putin isn’t ready to end the war with Ukraine as he thinks he is winning. Adding to this, the killing of two Israeli diplomats in the US keeps geopolitical risks in play and should further offer support to the safe-haven precious metal.
Traders now look forward to the release of New Home Sales data from the US, which, along with speeches by influential FOMC members will drive the USD demand. Apart from this, trade developments and the broader risk sentiment should provide some meaningful impetus to the XAU/USD pair.
Gold price bullish technical setup supports prospects for a move towards reclaiming the $3,400 round figure
From a technical perspective, the overnight retracement slide from a two-week top shows some resilience below the 23.6% Fibonacci retracement level of the recent move up from the monthly low touched last week. Moreover, positive oscillators on hourly/daily charts favor bullish traders and support prospects for an extension of over a one-week-old uptrend. Hence, any subsequent slide could be seen as a buying opportunity and find support near the $3,260-3,258 confluence – comprising the 38.2% Fibo. retracement level and the 200-period Simple Moving Average (SMA) on the 4-hour chart. A convincing break below, however, might prompt some technical selling and pave the way for deeper losses, towards the 50% retracement level around the $3,232 region, en route to the $3,200 round figure.
On the flip side, the $3,320-3,325 zone could act as an immediate hurdle ahead of the overnight swing high, around the $3,346 area. Some follow-through buying has the potential to lift the Gold price beyond the $3,363-3,365 intermediate hurdle and allow bulls to reclaim the $3,400 round figure. A sustained strength beyond the latter will reaffirm the near-term positive outlook and set the stage for a further appreciating move.
* The content presented above, whether from a third party or not, is considered as general advice only. This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.
