Gold declines below $3,350 on renewed USD strength

Gold stays on the back foot and trades slightly below $3,350 in the American session. The US Dollar gains some positive traction as markets lean toward a Fed policy hold in July after the May report, causing XAU/USD to stretch lower heading into the weekend.

XAU/USD Technical Overview

From a technical perspective, the top boundary of a multi-day-old range, around the $3,400 round figure, now seems to have emerged as an immediate barrier. Given that oscillators on the daily chart are holding in positive territory, a sustained strength beyond the said handle will be seen as a fresh trigger for bulls. The subsequent move-up could lift the Gold price to the $3,433-3,435 intermediate hurdle en route to the $3,500 neighborhood, or the all-time peak set in April.

On the flip side, the $3,334-3,333 area, or the lower end of the range, might continue to protect the immediate downside. Some follow-through selling, leading to a subsequent slide below the $3,326-3,324 horizontal resistance breakpoint, now turned support, could drag the Gold price below the $3,300 round figure, to the $3,286-3,285 region.

Fundamental Overview

Gold price (XAU/USD) retreats slightly from the daily top and trades with a mild positive bias, above the $3,350 level during the early part of the European session on Friday. The US Dollar (USD) gains some positive traction and moves away from its lowest level since April 22 set on Thursday amid repositioning trades ahead of the crucial US Nonfarm Payrolls (NFP) report. Apart from this, a generally positive risk tone and hopes for the resumption of US-China trade talks act as a headwind for the safe-haven precious metal.

However, US President Donald Trump's rapidly shifting stance on trade policies, along with geopolitical risks stemming from the protracted Russia-Ukraine war and conflicts in the Middle East, might keep a lid on any optimism in the markets. Moreover, US fiscal concerns and bets that the Federal Reserve (Fed) will lower borrowing costs further in 2025 might cap any further USD appreciation, which, in turn, might continue to support the Gold price. Traders might also opt to move to the sidelines heading into the key data risk.