Gold prices (XAU/USD) continued their steady rise early Friday during the European session, reaching a fresh daily peak around the $3,333 level. The precious metal is now approaching a two-week high recorded on Thursday and is poised to post its strongest weekly gain in over a month, supported by a range of fundamental factors.
Investor sentiment remains cautious amid growing concerns over the worsening US fiscal outlook. Heightened geopolitical tensions between the US and China, coupled with broader geopolitical risks, have further reinforced gold’s appeal as a safe-haven asset. Meanwhile, the US Dollar (USD) has struggled to sustain gains following upbeat economic data from Thursday, weighed down by expectations of additional Federal Reserve interest rate cuts—factors that have benefited the non-yielding yellow metal.
Market Developments: Gold Demand Bolstered by Safe-Haven Flows and USD Weakness
On Thursday, the Republican-led US House of Representatives narrowly approved President Donald Trump’s expansive tax and spending legislation. Nicknamed the “Big, Beautiful Bill,” the proposal is projected to increase the federal debt by approximately $3.8 trillion over the next decade and now moves to the Senate for consideration.
This fiscal development adds to mounting US-China trade tensions, fueling investor concerns over the potential economic fallout. In parallel, speculation about further monetary easing by the Fed has pressured the US Dollar, helping gold to recover from a slight pullback seen the previous day.
Economic indicators released Thursday painted a mixed picture. The US Department of Labor reported a decline in weekly initial unemployment claims to 227,000, signaling resilience in the labor market and offering modest support to the USD. Additionally, S&P Global’s preliminary data showed a rebound in US private sector activity for May, with the Composite PMI rising to 52.1. The Manufacturing PMI climbed to 52.3—its highest in three months—and the Services PMI hit a two-month peak of 52.3.
Geopolitical tensions remain elevated. President Trump reportedly informed European leaders that Russian President Vladimir Putin appears unwilling to end the Ukraine conflict, believing he holds the upper hand. Furthermore, the recent killing of two Israeli diplomats on US soil has kept geopolitical risks at the forefront, underpinning safe-haven demand for gold.
Looking ahead, market participants await US New Home Sales data alongside key Federal Open Market Committee (FOMC) speeches, which are expected to influence USD movements. Additionally, ongoing trade developments and broader risk sentiment will likely provide further direction for the XAU/USD pair.
Technical Outlook: Gold Eyes Higher Levels, Support Holds Near $3,260
From a technical standpoint, gold’s modest pullback from Thursday’s two-week peak has found support just below the 23.6% Fibonacci retracement level of the recent rally that began last week. Positive momentum indicators on hourly and daily charts favor bullish traders, suggesting the uptrend—now over a week old—may extend further.
Any downward corrections could present buying opportunities near the $3,260–$3,258 zone, where support aligns with the 38.2% Fibonacci retracement level and the 200-period Simple Moving Average (SMA) on the 4-hour chart. However, a decisive break below this area may trigger technical selling, potentially driving prices toward the 50% retracement level near $3,232 and the psychological $3,200 mark.
On the upside, resistance is expected around the $3,320–$3,325 range, ahead of the recent swing high near $3,346. Continued buying momentum could push gold beyond the $3,363–$3,365 intermediate barrier and challenge the $3,400 round figure. Sustained gains above this level would reinforce the bullish outlook and pave the way for further appreciation.
