• Gold bounces off technical support aided by the US Dollar, which peaks and rolls over. 
• The precious metal faces headwinds from the outlook for US interest rates and Trumponomics. 
• The US economy is in “remarkably good” shape, according to Fed Chair Powell, lifting the USD and weighing on Gold. 

Gold (XAU/USD) trades little changed on Friday, holding steady in the $2,560s after making a slight recovery from the two-month lows reached on the previous day. 

A stronger US Dollar (USD) continues to put pressure on Gold since it is mainly priced and traded in the US currency. Sticky US inflation and positive labor market data, as well as upbeat comments from the Federal Reserve (Fed) Chairman Jerome Powell, led the US Dollar Index (DXY) to a new year-to-date high on Thursday, piling further pressure on the yellow metal. 

Gold slumps on strong USD, Republican “clean-sweep”

Gold extended its decline, breaking below a major trendline and reaching new lows in the $2,530s on Thursday, after a combination of higher US factory-gate inflation data, lower US unemployment claims data and upbeat commentary from Fed Chairman Powell. 

Powell said the Fed would not need to not take such an aggressive approach to cutting interest rates given the US economy was doing “remarkably well”. The comments were negative for Gold, which, as a non-interest-paying asset, tends to outperform when interest rates are lower.