Gold prices increased by nearly 2% in one day and 5% over the week. The XAU/USD reached $3,359 after bouncing back from $3,287. This rise was triggered by US President Trump’s tariff threats against the EU, which affected the US Dollar. US Treasury yields fell as concerns grew about a newly approved debt-raising bill that could raise the US debt ceiling by $4 trillion. Trump’s remarks led to risk aversion in the market, causing the US Dollar Index to drop and creating a positive outlook for gold.

International Trade and Negotiations

In trade news, discussions with the EU made no headway, with Trump considering 50% tariffs on EU imports. Meanwhile, the US and Iran continued talks on Tehran’s nuclear program, and Russia made progress on ceasefire efforts in Ukraine. US housing data for April showed mixed results. Building permits dropped by 4%, while new home sales rose by 10.9%. Several Federal Reserve officials pointed out uncertainties in the market, and investors expect a rate cut of 49.5 bps by the end of the year. Gold prices are set to test the $3,400 mark, with initial resistance at recent highs of $3,438 and $3,450. Support levels are found at $3,300 and the May 20 low of $3,204.

Market Analysis

This article explains the factors influencing recent gold price movements and broader market responses. Here’s a breakdown of what this means for upcoming trading sessions. Gold’s steady price growth of nearly 5% over the week is mainly driven by geopolitical changes and expectations of monetary policy. The metal reached $3,359 after bouncing back from lower levels earlier in the week, showing that buyers are eager during dips. This price jump happened alongside a change in sentiment after Trump’s tariff comments weakened the dollar, making gold more attractive. We’ve seen this pattern before; discussions of trade conflicts and financial stress lead to volatility in rates and currency markets. With bond yields declining due to worries about future US borrowing, investors are adjusting their portfolios to account for increasing reliance on debt expansion. The new bill could raise the debt ceiling by $4 trillion, which is significant, prompting bond traders to consider inflation and how central banks might respond. Globally, the lack of progress in trade talks with Europe and tougher import policies continue to dampen sentiment. Additionally, political developments in the Middle East and Eastern Europe have shifted focus back to safe-haven assets. Economic data in the US added complexity. New home sales soared by almost 11%, but building permits fell by 4%, indicating that while current activity may be stable, future growth is uncertain. Consequently, several Federal Reserve members expressed worries about economic stability. The market is leaning towards nearly a 50 basis point rate cut this year, which supports the rise in assets that do not yield interest. From a technical viewpoint, gold prices are just below key resistance levels. The next targets are clearly set at $3,438 and $3,450, which correspond to recent highs. A break above these levels could lead to a new wave of buying. However, support levels are strong at $3,300 and the lower pivot near $3,204 from late May. This creates a wide trading range, providing risk parameters for making decisions. Breaks in either direction will require reevaluation. We will monitor this closely in the coming sessions. Upcoming data releases, policy comments, and geopolitical events could either extend or reverse the current trends. For now, traders should pay attention to these threshold levels for confirmation. Create your live VT Markets account and start trading now.

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