Gold (XAUUSD) Tests Key Resistance Amid US-China Trade Optimism Ahead of NFP Report

Gold (XAUUSD) corrected from the resistance at $3,410 as market sentiment turned risk-on following a positive phone call between US President Donald Trump and Chinese President Xi Jinping. Trump described the conversation as “positive” and hinted at renewed trade discussions, reducing safe-haven demand for gold. Despite weak US data, including higher jobless claims and a narrowing trade deficit, investors shifted toward risk assets, pushing XAU/USD down to $3,350. The chart below shows that the Initial jobless claims in the US increased by 8,000 to 247,000 on May 31.

On the other hand, the 10-year US Treasury yield rebounded to 4.39%, while real yields also increased. These gains in yields make gold less attractive. As a result, bullion prices declined on Thursday. However, US economic indicators suggest growing pressure on the Federal Reserve to ease monetary policy.

Despite a sharp correction in the gold market, prices rebounded strongly on Friday morning and held firm ahead of the Nonfarm Payrolls (NFP) report. Weaker NFP data could raise expectations of Fed rate cuts, supporting gold prices. Conversely, strong labour figures may strengthen the US dollar and push yields higher, which could pressure gold.

The ADP Employment Change report signalled weakness in the labour market, suggesting the potential for a soft NFP release. The chart below shows that private businesses in the US added only 37,000 jobs in May 2025, the lowest monthly gain since March 2023.

The correction in gold on Thursday is seen as consolidation near the resistance at $3,410. A break above this level would indicate a strong upside move, supported by central bank demand and ongoing macroeconomic uncertainty.

Gold Technical Analysis

XAUUSD Daily Chart – Resistance of $3410

The daily chart for spot gold shows that the price has reached the strong resistance region around $3,400 after breaking out of the descending channel. After hitting this resistance zone, the price began to correct toward the $3,300 area. As long as spot gold remains above the $3,300 level, the likelihood of a continued upward breakout remains high.

XAUUSD 4-Hour Chart – Constructive Rebound to $3,410

The 4-hour chart for spot gold shows strong resistance in the $3,410–$3,430 area. The price hit the $3,410 resistance on Thursday and began to correct lower. However, strong support lies in the $3,345 region. As long as the price remains above $3,300, the likelihood of an upward breakout above $3,430 remains high.

Treasury Yields (TNX) Technical Analysis

10-Year Treasury Note Yield Daily Chart – Rebound

The daily chart for the 10-year US Treasury note yield shows a rebound from the 50-day SMA. The correction from 4.62% triggered a bounce at 4.33%, near the 50-day SMA. Although the yield remains in consolidation mode, the overall trend remains bullish. A break above 4.70% is needed to confirm further upside toward the 5% area.

10-Year Treasury Note Yield 4-Hour Chart – Consolidation

The 4-hour chart for the US 10-year Treasury note shows strong consolidation between the 4.00% and 4.80% levels. The failure to break above 4.60% triggered a correction toward the 4.33% area.

The yield is now rebounding toward the 4.60% level again. A break above 4.80% would signal a strong move to the upside.

US Dollar (DXY) Technical Analysis

US Dollar Daily – Bearish Pressure

The daily chart for the US Dollar Index shows that the index is trading under strong bearish pressure. Despite this pressure, it has failed to break below the 98 level. The index hit 98.35 again on Thursday and initiated a strong rebound.

A break below 98 would likely trigger a sharp drop toward the 96 level. As long as the index remains below the 50-day SMA, around 100.65, the likelihood of further downside remains high.

US Dollar 4-Hour Chart – Descending Channel

The 4-hour chart for the US Dollar Index shows that the index is trading within a descending channel. The failure to break above 100.65 triggered a substantial drop. The key support lies around the 96 level, which marks the lower boundary of the descending channel. A break below 96 may trigger another substantial drop towards 90. However, a break above 100.65 would signal a bullish reversal and open the door for further upside.