Gold (XAU/USD) maintained modest intraday gains heading into the European session on Friday but struggled to break decisively above the $3,400 level, a multi-week high reached the previous day. The US Dollar (USD) rebounded from its lowest point since April 22, supported by repositioning ahead of the critical US Nonfarm Payrolls (NFP) report. Meanwhile, optimism around renewed US-China trade negotiations and a generally positive risk sentiment weighed on gold’s safe-haven appeal.
Investors remain cautious amid US President Donald Trump’s unpredictable trade policy stance and ongoing geopolitical tensions from the Russia-Ukraine conflict and unrest in the Middle East. Concerns over the US fiscal deficit and expectations that the Federal Reserve will cut interest rates in 2025 have tempered USD strength, indirectly supporting gold’s non-yielding status as a hedge ahead of the crucial economic data.
Market Movers and Trade Developments
Trump and Chinese President Xi Jinping agreed to further trade discussions, with Trump describing the call as “very positive,” prompting a brief pullback in gold from Thursday’s four-week peak. However, this bullish reaction faded quickly due to Trump’s shifting trade positions. Ahead of Friday’s NFP release, repositioning trades helped gold regain some ground during the Asian session.
The US employment report is forecasted to show 130,000 new jobs added in May, down from April’s 177,000 gain, while the unemployment rate is expected to remain steady at 4.2%. Other recent labor data indicate a cooling job market, which could encourage the Fed to consider interest rate cuts. Market participants currently price in at least two 25-basis-point reductions by year-end. Yet, recent remarks from Fed officials suggest a cautious wait-and-see stance amid ongoing trade uncertainties, placing significant importance on Friday’s data to shape the Fed’s policy outlook and USD direction.
Technical Outlook: Bulls Eye $3,400 Breakout
Technically, gold faces resistance near the $3,400 mark, the upper limit of its recent trading range. With daily chart momentum indicators staying positive, a decisive move above this level could trigger further buying, potentially lifting prices toward intermediate resistance around $3,433–$3,435 and the $3,500 all-time high reached in April.
On the downside, support holds near $3,334–$3,333. A break below this, especially under $3,326–$3,324, could drag prices down toward the $3,286–$3,285 zone and back under the $3,300 level, signaling a possible retracement for the precious metal.
