Gold Price Update: US Dollar Strengthens, Impact on Gold Market
- Gold price hits fresh weekly lows below $3,300 early Friday.
- The US Dollar firms up on US-UK trade deal, profit-taking ahead of US-China trade talks.
- Gold price needs a daily close below 21-day SMA at $3,307 to negate near-term bullish bias.
Gold price is flirting with weekly lows below $3,300 early Friday as the US Dollar (USD) stands tall on renewed optimism on the US trade deals front.
Gold Price Outlook: US-China Trade Talks in Focus
The US Dollar stands tall against its major currency rivals as worries over a potential US economic downturn ease following the announcement of a "breakthrough deal" by US President Donald Trump and British Prime Minister Keir Starmer on Thursday.
The US-UK trade deal raised hopes that US trade agreements with other countries are in the offing, especially as the US and China begin their first high-level trade talks in Switzerland on Saturday.
- US Treasury Secretary Scott Bessent and Chief Trade Negotiator Jamieson Greer will meet with China’s Vice Premier, He Lifeng, over the weekend.
- Markets may likely take profits off the table on their USD and Gold positions as the looming US-China trade risks approach.
Geopolitical Factors Supporting Gold Price
Investors could also see bargain hunting in the bright metal as geopolitical risks globally remain elevated. 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 broader military conflict along the India-Pakistan border keep geopolitical risks in play.
- A hit to the Chinese trade balance in April due to the probable impact of US tariffs could also bode well for the traditional safe haven.
- China’s expansion to its Gold reserves for the sixth straight month also serves in the interest of Gold buyers.
Gold Price Technical Analysis: Daily Chart
Gold price fell sharply after facing rejection once again above the $3,400 barrier. In doing so, Gold price has breached the critical 21-day Simple Moving Average (SMA) at $3,306.
- The 14-day Relative Strength Index (RSI) has stalled its descent while defending the midline, suggesting that a rebound could be in the offing.
- Gold price needs to recapture the $3,400 mark, above which buyers must establish a firm foothold above the two-week high of $3,440.
- On the downside, Gold sellers yearn for a daily closing below the 21-day SMA at $3,306, which could negate any bullish potential in the near term.
US-China Trade War FAQs
- Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end.
- The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries.
Analysis:
In summary, the recent developments in the US trade deals front, especially the US-UK trade deal and the upcoming US-China trade talks, have significantly impacted the Gold market. The strengthening of the US Dollar has put downward pressure on Gold prices, but geopolitical risks and potential trade disruptions continue to support the demand for Gold as a safe haven asset.
For investors, it is essential to monitor the progress of the US-China trade talks, as any developments in the trade relationship between the two countries can have a significant impact on the financial markets, including the price of Gold. Additionally, keeping an eye on geopolitical tensions and trade war scenarios can help investors make informed decisions when it comes to their investment strategies and asset allocations.