Gold prices (XAU/USD) extended modest intraday gains on Wednesday, reaching a fresh daily high near $3,323-$3,324 during early European trading. Despite recent optimism around trade developments, investors remain cautious due to ongoing uncertainty about U.S. President Donald Trump’s trade tariffs, fiscal challenges, and persistent geopolitical risks. These factors continue to boost demand for gold as a safe-haven asset.
Meanwhile, the U.S. dollar (USD) struggled to sustain its slight gains amid concerns over the worsening U.S. fiscal outlook. Additionally, market expectations that the Federal Reserve may cut interest rates again limited aggressive dollar buying and supported further upside potential for gold. Traders appear hesitant, awaiting the Federal Open Market Committee (FOMC) minutes before making fresh moves.
Market Movers: Durable Goods and Consumer Confidence Impact
The U.S. Census Bureau reported a 6.3% decline in durable goods orders for April, marking a sharp reversal from March’s revised 7.6% increase. Although the drop was steep, it was still better than the forecasted 7.9% decrease. Excluding transportation, orders modestly rose by 0.2% during the month.
Adding to market sentiment, the Conference Board’s U.S. Consumer Confidence Index surged to 98 in May, rebounding sharply from April’s 85.7. This 12.3-point increase marks the biggest monthly gain in four years, driven by improved economic and labor market expectations amid the U.S.-China trade truce, which has also lent support to the U.S. dollar.
Trade and Geopolitical Developments
President Trump’s decision to delay the implementation of 50% tariffs on the European Union from June 1 to July 9 provided temporary relief to markets, putting some pressure on gold prices. However, deep-seated trade uncertainties, ongoing U.S.-China tensions, U.S. fiscal concerns, and geopolitical instability keep investors cautious.
Traders are pricing in at least two 25 basis point interest rate cuts by the Federal Reserve in 2025, supported by signs of easing inflation. Additionally, concerns over Trump’s proposed “Big, Beautiful Bill” potentially worsening the U.S. budget deficit may cap further dollar strength.
On the geopolitical front, Trump criticized Russian President Vladimir Putin for refusing ceasefire talks with Ukraine amid Russia’s deadliest drone and missile attacks since the 2022 invasion. Meanwhile, Israeli officials denied reports of a new Gaza ceasefire agreement proposed by the U.S.
Technical Outlook: Key Support and Resistance Levels
Technically, gold’s recent drop below a short-term ascending trendline overnight triggered bearish momentum. Selling below the 200-period Simple Moving Average (SMA) and sustained trading under $3,300 would confirm a negative bias. Yet, daily chart oscillators remain inconclusive, suggesting that declines near the $3,250-$3,245 horizontal support zone could attract buyers.
On the upside, gold may face resistance near the $3,340-$3,345 level, corresponding to the trendline breakout point. A strong move above this area could spark short-covering rallies pushing prices toward last Friday’s two-week high near $3,365-$3,366. Sustained gains beyond this level might pave the way for a test of $3,400 and potentially higher toward the $3,465-$3,470 resistance zone.
Looking Ahead
Traders now await the release of the FOMC meeting minutes for clearer guidance on the Fed’s rate-cut path, which will significantly impact both the USD and gold. This week also features key U.S. economic reports, including the Preliminary Q1 GDP and the Personal Consumption Expenditures (PCE) Price Index, due Thursday and Friday respectively, which are expected to further shape market direction.
