Gold Firms But Heads for Weekly Loss Amid Easing Trade Tensions, Strong Jobs Report

The price of gold has seen a mixed week, with spot prices rebounding slightly to $3,255.01/oz on Friday after hitting a two-week low of $3,211.53/oz on Thursday. However, the precious metal remains on track for its second consecutive weekly loss, down 2.1% since April 22—a historic high of $3,500.05/oz. This retreat reflects a confluence of factors, including easing trade tensions between the U.S. and China and stronger-than-expected U.S. economic data. Yet, beneath the short-term volatility, long-term drivers like geopolitical risks and inflation continue to underpin gold’s strategic value.

Trade Tensions: A Double-Edged Sword

The recent dip in gold prices has been partly fueled by tentative improvements in U.S.-China trade relations. U.S. President Donald Trump’s remarks about potential trade deals with China, alongside Chinese state media’s claim that Washington sought to reinitiate tariff talks, reduced demand for gold as a safe haven. Investors shifted toward riskier assets like stocks, with tech giants like Apple—previously penalized by trade-related costs—rebounding slightly.

However, the path to resolution remains fraught. China’s Commerce Ministry insists the U.S. must first remove its unilateral 145% tariffs, while Beijing faces its own hurdles, including a 16-month low in factory activity and a projected 75–80% decline in exports to the U.S. by late 2025. These pressures, combined with geopolitical flashpoints like the India-Pakistan standoff, ensure gold retains its role as a haven amid lingering instability.

Strong Jobs Report Cools Rate-Cut Hopes

The April U.S. nonfarm payrolls report added 177,000 jobs, surpassing forecasts of 130,000 and signaling labor market resilience. This data dampened expectations of an imminent Federal Reserve rate cut, lifting 10-year Treasury yields—a headwind for gold, which yields no interest.

The Fed’s reluctance to cut rates amid sticky inflation (Core PCE at 0.1% in April) has further weakened gold’s appeal. Yet, traders remain cautious: the report is backward-looking, and the Fed’s next move hinges on whether trade tensions or inflation pressures dominate in coming months.

Technical Analysis: Key Levels to Watch

Gold faces immediate resistance at $3,328/oz (April 28 high) and $3,366–$3,368/oz (April highs). A breach of these levels could propel prices toward $3,400/oz, but sustained weakness below $3,260–$3,265 (38.2% Fibonacci retracement) risks a drop to $3,200/oz—a 50% retracement from April’s peak.

Long-Term Drivers: Why Gold Remains a Hedge

Despite the near-term decline, analysts highlight structural supports:
1. Geopolitical Risks: Ongoing U.S.-China tariff disputes, Middle East conflicts, and rising debt levels (global debt at $300 trillion) sustain demand for safe havens.
2. Inflation: Persistent above-target inflation (U.S. CPI at 3.2% in March) keeps gold’s inflation-hedging role intact.
3. Central Bank Demand: ASEAN nations, including Vietnam, have boosted gold reserves, while global central banks purchased 1,200 tonnes in Q1 2025—an 18% annual increase.

Conclusion: A Strategic Correction, Not a Sell-Off

Gold’s recent dip represents a tactical correction rather than a long-term trend reversal. While trade optimism and strong U.S. data have reduced safe-haven demand, structural factors—geopolitical tensions, inflation, and central bank diversification—remain firmly in place.

Investors should monitor two key catalysts:
1. U.S.-China Trade Talks: A formal agreement could further weaken gold, but ongoing disputes or escalation would reignite safe-haven buying.
2. Fed Policy: A delayed rate cut or renewed inflation concerns could revive gold’s appeal.

With $8.7 billion in Q1 inflows to gold-backed ETFs and central banks continuing to accumulate bullion, gold’s strategic role in portfolios remains unchallenged. The dip to $3,200/oz presents a buying opportunity for long-term investors, while short-term traders should watch the $3,366 resistance closely.

In short, gold’s journey ahead hinges on whether trade optimism or macroeconomic risks dominate—making it a market to watch, not ignore.