Gold (XAU/USD) continued to lose ground during the first half of the European session on Tuesday but showed slight recovery after hitting a daily low near the $3,300 level. The precious metal faced pressure for a second consecutive day, influenced by renewed optimism after US President Donald Trump postponed the planned 50% tariffs on the European Union (EU). Meanwhile, the US Dollar rebounded modestly from its monthly low, further weighing on gold prices.
Despite this decline, gold retained some resilience due to ongoing uncertainties over Trump’s trade policies, concerns over the deteriorating US fiscal outlook, and persistent geopolitical risks. Market expectations that the Federal Reserve will maintain its easing stance and implement further interest rate cuts in 2025 are also limiting the US Dollar’s upside. This dynamic provides support for gold, a non-yielding safe haven, and cautions aggressive short positions on XAU/USD.
Market Developments: Tariff Postponement and Fiscal Concerns
On Sunday, President Trump agreed to delay the imposition of 50% tariffs on the EU from June 1 to July 9. The announcement followed a phone call with EU President Ursula von der Leyen, who expressed readiness for swift trade negotiations but requested additional time to reach an agreement. This move relieved markets slightly but did not dispel concerns about ongoing trade tensions—especially between the US and China, the world’s two largest economies.
Meanwhile, US fiscal challenges remain prominent. Trump’s “Big, Beautiful Bill,” which could add approximately $4 trillion to the federal deficit over the next decade, passed the House last week and faces a Senate vote this week. The prospect of a widening budget deficit is adding pressure on markets.
Inflation and Fed Policy Expectations
Signs of easing inflation in the US have bolstered hopes that the Federal Reserve will intervene to support economic growth. Traders are currently pricing in at least two 25-basis-point rate cuts by year-end, keeping the US Dollar subdued near its monthly low and indirectly benefiting gold.
Geopolitical Tensions Add Volatility
Geopolitical risks persist, with Russia launching its largest aerial assault since its 2022 invasion of Ukraine. President Trump has hinted at potential new sanctions against Russia, labeling Russian President Vladimir Putin “crazy.” Additionally, ongoing Israeli strikes on Gaza continue to add to global uncertainty, lending further support to safe-haven assets like gold.
Upcoming Economic Data and Impact
Traders are eyeing Tuesday’s US macroeconomic releases, including Durable Goods Orders and the Conference Board’s Consumer Confidence Index. However, all eyes are on Wednesday’s Federal Open Market Committee (FOMC) minutes, which may clarify the Fed’s rate-cut trajectory and impact the US Dollar.
Later this week, the market will also react to the Preliminary Q1 GDP on Thursday and the Personal Consumption Expenditure (PCE) Price Index on Friday. These events are expected to inject volatility into the XAU/USD pair and present trading opportunities.
Technical Outlook: Key Levels to Watch
Technically, gold is currently testing short-term ascending trend-line support. A decisive break below the $3,300 mark and the 100-period Simple Moving Average (SMA) on the 4-hour chart could expose gold to deeper losses.
On the upside, the $3,325–$3,326 range has emerged as an immediate resistance level, followed by Friday’s swing high near $3,366. Sustained strength above these levels could trigger bullish momentum, pushing gold back toward the $3,400 mark. Further gains may challenge resistance around $3,430 and then the intermediate zone between $3,465 and $3,470, potentially paving the way to test the all-time high near $3,500 reached in April.
