Gold edges down amid clash over status of US-China trade talks
- Gold price dips on Friday and looks set to close off this week at a loss.
- China says no trade talks are underway with the US, refuting Trump’s claims of ongoing negotiations.
- Traders appear to be buying into the rumours of a deal, pushing stocks higher and reducing their exposure to Gold.
Gold price (XAU/USD) is on the back foot on Friday, almost erasing all of Thursday’s gains, and looks set to close off this week in the red. The downmove comes amid increasing confusion on what is the status of the trade conflict between the United States (US) and China, with US President Donald Trump giving the impression that talks are taking place and China denying it.
In early trading on Friday, Bloomberg released a headline that mentioned China is weighing exempting some US goods from tariffs as costs are rising out of control, throwing markets left and right. At the same time, Bloomberg also reported that the country is preparing emergency plans to deal with external shocks with new finance and policy tools.
Daily digest market movers: SNB books gain on Gold rush
- After reports from the Swiss National Bank (SNB) booked a 6.7 billion Swiss Francs (CHF) profit on the back of its Gold holdings in the first quarter of 2025, the central bank of Kenya says it is considering adding Gold to its reserves to diversify its foreign-exchange holdings beyond the dollar and other currencies, Bloomberg reports.
- The record-setting rally in Gold and its large intraday moves made waves in China by stoking retail demand, fanning unprecedented trading volumes on the Shanghai exchange and drawing warnings from the authorities, Reuters reports.
- US Treasury Secretary Scott Bessent said the US and South Korea could reach an “agreement of understanding” on trade as soon as next week, Bloomberg reports. More and more headlines on possible trade deal agreements should put downward pressure on Gold.
Gold Price Technical Analysis: Semantics-related problems
The overheated Gold rally looks to be in need of some further cooling. Traders look to be buying into the rumors that a trade deal between the US and China could come very soon, despite China coming out contradicting those rumors. The risk here could be that markets are misinterpreting the US semantic on whether they are “talking” or “negotiating”, and that no deal is done anytime soon with possibly a revisit to $3,500
Looking at technical levels, the daily Pivot Point at $3,335 is the first upside and intraday level that needs to be reclaimed. The R1 intraday resistance saw a small attempt for a test in very early opening this Friday, coming in around $3,381. Further up, Gold price could extend the rally to the R2 resistance at $3,414, surpassing the $3,400 handle.
On the downside, the S1 support this morning briefly broke, though sees price action now reversing back above it, at $3,302. Further down, the S2 support at $3,256 precedes the technical pivotal floor near $3,245 (April 11 high).
XAU/USD: Daily Chart
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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