Gold (XAU/USD) is experiencing profit-taking this Friday, with prices set to close the week in the red around $3,300. The downturn follows growing confusion about the state of the ongoing trade conflict between the United States (US) and China. US President Donald Trump indicated that discussions are ongoing, while China denied any such talks, heightening market uncertainty.
Trade Conflict Developments Impact Market Sentiment
Early Friday trading saw a Bloomberg headline reporting that China is considering exempting certain US goods from tariffs due to rising costs. This news sent markets fluctuating wildly. Additionally, China is reportedly preparing emergency measures, including new financial and policy tools, to cope with external economic shocks.
As the day progressed, Trump stated that 200 trade deals had already been struck and that Chinese President Xi Jinping had been in contact with him, according to Reuters. These contradictory reports contributed to the volatility in gold prices.
Global Demand for Gold Remains Strong
Despite the uncertainty surrounding the trade situation, gold remains in focus as a safe-haven asset. Reports from the Swiss National Bank (SNB) revealed a 6.7 billion Swiss Franc profit from gold holdings in the first quarter of 2025. Meanwhile, the central bank of Kenya is reportedly considering adding gold to its reserves to diversify beyond the US dollar and other currencies, according to Bloomberg.
Gold’s recent rally has sparked strong retail demand in China, driving record trading volumes on the Shanghai exchange and drawing warnings from authorities about the rapid price movement.
Trade Deals and Market Reactions
US Treasury Secretary Scott Bessent hinted at a potential “agreement of understanding” between the US and South Korea on trade as soon as next week, further fueling expectations of a global trade thaw. As more headlines about potential trade agreements emerge, gold could face downward pressure.
Gold Price Technical Outlook
The gold rally appears to be cooling off after a period of rapid gains. Traders are reacting to rumors about a potential US-China trade deal, despite contradictory signals from China. The key risk here is that markets may be misinterpreting the semantics of “talks” versus “negotiations,” leading to overoptimism and the possibility of a pullback toward the $3,500 level if no deal is reached soon.
From a technical perspective, gold needs to reclaim the daily Pivot Point at $3,335 for an upside push. The first intraday resistance level, R1, is around $3,381, with further resistance at R2 near $3,414, above the key $3,400 mark.
On the downside, the S1 support level at $3,302 briefly broke but is now holding steady. A further drop could test the S2 support at $3,256, followed by the pivotal $3,245 level, marking the April 11 high.
The outlook remains mixed as traders weigh conflicting news on trade negotiations and global demand for gold.
