Gold (XAU/USD) found support at the $3,260 level on Friday after snapping a three-day losing streak, gaining back momentum despite recording a negative weekly performance. The recovery was fueled by emerging hopes of renewed China-US trade talks, helping gold claw back some of its recent losses driven by easing tariff-related concerns.
Market sentiment improved after China’s Commerce Ministry acknowledged that senior US officials had expressed interest in resuming trade negotiations. This renewed dialogue, though still preliminary, softened the risk-off tone that had pressured bullion earlier in the week.
Easing Tariff Tensions and Tail Risks Support XAU/USD Recovery
Gold’s earlier sell-off was largely driven by a narrative of tariff relief from the US, particularly President Trump’s executive actions aimed at supporting the automotive sector.
Though this prospect dampened the immediate bullish impulse for gold, analysts remain alert to tail risks. Any disruption in the talks could trigger sharp risk-off reactions. The Japan-US trade negotiations serve as a cautionary tale, with Japan now leveraging its massive $1.1 trillion US debt holdings to gain trade advantages—raising the specter of financial diplomacy playing a bigger role.
All Eyes on NFP, Fed Policy Path Remains Unclear
The US Federal Reserve’s next steps also hang in the balance, with Friday’s NFP report expected to inject volatility. Consensus forecasts peg job growth at 130,000, well below the prior print of 228,000. A significant miss could accelerate market bets on a June interest rate cut.
Should NFP surprise to the downside, the gold price could benefit from renewed rate cut expectations and a weaker dollar outlook. Conversely, a strong print may delay Fed easing, potentially limiting gold’s upside in the short term.
Gold Technical Outlook
From a technical perspective, gold faces immediate resistance near $3,254, aligning with R1 and the April 11 high of $3,245. A convincing break above this zone could open the door to $3,332 (R2), which would confirm a reversal of the three-day slide.
On the downside, support lies at $3,197 (S1), in confluence with Thursday’s low. A deeper pullback could bring the April 3 high of $3,167 and S2 at $3,155 into focus. This heavy technical zone makes the $3,260 handle a pivotal intraday battleground.
Conclusion
Despite a negative weekly close, the gold price’s ability to reclaim $3,260 on Friday signals resilience. While the market digests headlines about possible China-US trade talks and awaits the crucial NFP report, XAU/USD may remain range-bound within key technical levels. Tail risks linked to geopolitical negotiations and monetary policy uncertainty continue to underpin safe-haven demand.
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