Gold struggled to capitalize on a rebound from the $3,054 area or a one-week low late the day before in early European trading Thursday, and attracted fresh sellers in Friday's Asian session. The commodity retreated below the $3,100 mark in the final hour, although the fundamental backdrop calls for caution before any meaningful correction down from the all-time peak hit on Thursday.
Concerns that U.S. President Donald Trump's reciprocal tariffs could undercut global economic growth and trigger a U.S. recession are likely to continue to be a positive factor for safe-haven gold prices. In addition, the U.S. dollar (USD) hovered near multi-month lows as the market increasingly bets that the Federal Reserve (Fed) will soon resume its rate-cutting cycle and should help limit losses for the non-yielding gold.
Gold prices attracted some sellers for a second day on Friday, although a combination of factors should continue to work in the positive and limit any meaningful correction down from all-time highs.
U.S. President Donald Trump shocked global financial markets late Wednesday and announced reciprocal tariffs of at least 10% on all imports, which could have a negative impact on the world economy.
As Trump's trade policies reignited fears of a U.S. recession, traders raised expectations that the Federal Reserve will resume its rate-cutting cycle in June and cut borrowing costs fourfold by the end of the year.
The yield on the benchmark 10-year U.S. government bond fell below 4.0% for the first time in six months, failing to help the dollar rebound from multi-month lows.
Meanwhile, data released on Thursday showed that economic activity in the U.S. services sector slowed in momentum in March, with the ISM Services Purchasing Managers Index falling to 50.8 from 53.5 in February, below expectations.
Separately, the U.S. Department of Labor (DOL) reported that new claims for unemployment insurance by U.S. citizens fell to 219K in the week ended March 29 from 225K previously.
The aforementioned fundamental backdrop favors XAU/USD bulls. Hence, the minor decline could be attributed to some repositioning trades ahead of the release of the US monthly employment details.
The well-known US Non-Farm Payrolls (NFP) report is expected to show that the US economy added 135K new jobs in March, but the unemployment rate is expected to remain stable at 4.1%.
From a technical perspective, any subsequent decline may continue to find decent support around the $2,056-2,054 horizontal area. This area is close to the 100-period Simple Moving Average (SMA) on the 4-hour chart and should now act as a key pivot point for short-term traders. A convincing break below could spark some technical selling and make the gold price vulnerable to an accelerated corrective slide further towards the intermediate support of $3,036-3,035 and on to the psychological $3,000 mark.
On the other hand, the $3115-3125 congestion zone now appears to be an immediate hurdle. This is followed by resistance around the $3143 region and the all-time peak in the $3157-3158 region hit on Thursday, which, if cleared, could be seen as a new trigger for bullish traders. This, in turn, would set the stage for the continuation of the recent solid uptrend that gold prices have witnessed over the past four months or so.
