Gold prices reversed Thursday’s gains, falling below the $3,300 mark, as the US Dollar strengthened and the precious metal struggled to benefit from declining US Treasury yields. At the time of writing, gold was trading at $3,294, marking a loss of more than 1.60%. The dip in prices followed a shift in sentiment triggered by new developments in US-China trade relations.
The recent volatility in gold prices coincides with fluctuating market sentiment after US President Donald Trump’s remarks on trade. While Bloomberg initially reported that China had expressed interest in exempting certain US products from tariffs, Trump later dampened optimism by stating he would not remove tariffs unless China offered something in return. This statement fueled market uncertainty, pushing gold lower despite some retracement in the Greenback’s gains.
Although the US Dollar Index (DXY) edged down slightly, it remained up 0.23%, holding at 99.51, preventing gold from recovering its losses. The market’s unpredictability was further compounded by traders who chose to book profits ahead of the weekend.
Adding to the negative sentiment, the University of Michigan’s April Consumer Sentiment Index showed a significant drop, reaching its fourth-lowest level since the 1970s. The index fell to 52, down from 57 in March, while inflation expectations also rose, with consumers now anticipating a 6.5% increase in prices over the next year.
Looking ahead, traders are focused on next week’s economic data, including the March JOLTS report, Q1 2025 GDP, the ISM Manufacturing PMI, and April’s Nonfarm Payrolls. In terms of Federal Reserve policy, markets are pricing in a 92% chance that interest rates will remain unchanged at the upcoming meeting, though expectations are for a gradual reduction to 3.45% by the end of the year.
In other market news, the yield on the US 10-year Treasury note fell by five basis points, reaching 4.266%, and US real yields declined by 4.5 basis points to 1.968%. Meanwhile, Cleveland Fed President Beth Hammack suggested the central bank could act as soon as June if economic data supports such a move, but added that current uncertainty is weighing on business decisions.
Gold’s technical outlook remains cautiously optimistic, although its recent drop below $3,300 signals a potential test of the $3,200 mark. The uptrend in gold is still intact, but momentum has weakened. If prices break through support at $3,250, the next key levels to watch will be $3,167 and $3,041, which correspond to recent highs and the 50-day Simple Moving Average. Conversely, a recovery above $3,300 could see resistance at $3,386, followed by $3,400, $3,450, and $3,500.
