Gold prices (XAU/USD) nudged upward on Wednesday, reaching a fresh intraday high near $3,323–$3,324 during early European trading. Despite optimism surrounding trade developments, investors remain cautious amid ongoing uncertainty over U.S. President Donald Trump’s tariffs, fiscal challenges, and persistent geopolitical risks. These factors continue to support gold’s appeal as a safe-haven asset.
The U.S. dollar (USD) struggled to maintain modest gains amid growing concerns about the deteriorating U.S. fiscal outlook. Market expectations of further Federal Reserve interest rate cuts also curbed aggressive dollar buying, bolstering gold’s upside potential. Traders are largely on hold, awaiting the Federal Open Market Committee (FOMC) minutes for clearer signals before making significant moves.
Economic Data Influence
Recent U.S. economic reports added mixed signals to market sentiment. The U.S. Census Bureau revealed a 6.3% drop in durable goods orders for April, a sharp reversal from March’s revised 7.6% rise. Although steep, the decline was milder than the forecasted 7.9% decrease. Excluding transportation, orders slightly increased by 0.2%.
Meanwhile, the Conference Board’s U.S. Consumer Confidence Index jumped to 98 in May, up sharply from April’s 85.7. This 12.3-point surge marks the largest monthly gain in four years, reflecting improved economic and labor market expectations amid the U.S.-China trade truce. This boost lent some support to the U.S. dollar.
Trade and Geopolitical Updates
President Trump’s decision to postpone imposing 50% tariffs on the European Union from June 1 to July 9 temporarily eased market pressure, putting some downward pressure on gold prices. However, deep-rooted trade uncertainties, ongoing U.S.-China tensions, U.S. fiscal concerns, and geopolitical instability keep investors cautious.
Markets currently price in at least two 25-basis-point rate cuts by the Fed in 2025, backed by signs of easing inflation. Trump’s proposed “Big, Beautiful Bill,” which could worsen the U.S. budget deficit, may also limit further dollar gains.
On the geopolitical front, Trump criticized Russian President Vladimir Putin for rejecting ceasefire talks with Ukraine amid Russia’s deadliest drone and missile attacks since the 2022 invasion. Israeli officials denied reports of a new U.S.-proposed Gaza ceasefire agreement, adding to regional tensions.
Technical Analysis
Technically, gold’s overnight dip below a short-term ascending trendline triggered bearish momentum. A sustained break below the 200-period Simple Moving Average (SMA) and trading under $3,300 would confirm a negative outlook. However, daily oscillators remain inconclusive, indicating that the $3,250–$3,245 support zone may attract buyers.
On the upside, resistance is expected near $3,340–$3,345, aligning with the trendline breakout point. A decisive move above this could ignite short-covering rallies targeting last Friday’s two-week high around $3,365–$3,366. Continued gains beyond that could open the door to test $3,400 and potentially $3,465–$3,470 resistance.
Looking Ahead
Traders are now focused on the upcoming FOMC meeting minutes for clearer guidance on the Fed’s rate-cut strategy, a key factor influencing both the USD and gold. This week’s calendar also features important U.S. economic data, including Thursday’s Preliminary Q1 GDP and Friday’s Personal Consumption Expenditures (PCE) Price Index, both expected to shape market direction further.
