Gold extends rally as Trump casts doubts on China's tariffs

• Gold set to book over 2.50% gains for the week. 
• US yields plunge, and equities rally after President Trump commented that he might not impose tariffs on China. 
• Gold is back on track to hit the all-time high of $2,790 and is set to close off the week with a firm gain. 

Gold's price (XAU/USD) pops higher and trades at $2,774 at the time of writing on Friday after US President Donald Trump surprised with comments the previous day casting doubts on the application of tariffs on China. The comments came after Trump had a phone call with China's President Xi Jinping. Meanwhile, US yields are retreating after the Bank of Japan (BoJ) hiked interest rates by 25 basis points. 

In the economic data front, the US will receive its S&P Global Purchasing Managers Index (PMI) preliminary readings for January this Friday. The University of Michigan will close off the day with its Consumer Sentiment Index for January, the final reading. Headline risk might retake place with US President Donald Trump adding remarks on tariffs. 

Daily digest market movers: Angry mob

• US President Donald Trump commented on his phone call with Chinese Prime Minister Xi Jinping that he does not want to impose tariffs on China and that a deal would be more constructive, Bloomberg reported. 
• President Trump also talked about the Federal Reserve (Fed) and US rates, affirming that he would demand an immediate drop. While lower borrowing costs are typically bullish for precious metals, traders are cautious as monetary policy is set by the central bank, which is due to publish its interest rate decision next week, Bloomberg reports. 
• US yields are off their weekly lows, with the US 10-year benchmark rate currently trading at 4.625%, recovering from its poor performance earlier this week at 4.528%. However, it still has a long way to go before it reaches the more-than-one-year high from last week at 4.807%.

Technical Analysis: More dovish than ever?

Gold price rallies again, thanks to US President Donald Trump's statement after his phone call with Chinese President Xi Jinping that he would rather not impose tariffs on China. It looks like Trump is backtracking on earlier comments made during his campaign. A tail risk could grow here, in case negotiations are not going the way t Trump wants, he can still implement tariffs anyway. 

First line of support remains $2,721, a sort of double top in November and December broken on Tuesday. Just below that, $2,709 (October 23, 2024, low) is in focus as a second nearby support. In case both abovementioned levels snap, look for a dive back to $2,680 with a full-swing sell-off. 

Gold is back on its way to the all-time high of $2,790, which is less than 1% away from current levels. Once above that, a fresh all-time high will present itself. Meanwhile, some analysts and strategists have penciled in calls for $3,000, but $2,800 looks to be a good starting point as the next resistance on the upside. 

XAU/USD: Daily Chart