Gold prices (XAU/USD) remained steady near a four-week high on Wednesday during early European trading, as investors held back from placing large bets ahead of a potential call between U.S. President Donald Trump and Chinese President Xi Jinping. The precious metal hovered around the $3,350 level, extending its recent consolidation as market participants weighed geopolitical risks and monetary policy signals.
Growing uncertainties surrounding global trade, particularly with new tariffs on steel and aluminum imports coming into effect, continue to lend support to gold as a safe-haven asset. Meanwhile, expectations that the Federal Reserve will maintain its dovish stance and possibly lower interest rates further in 2025 have kept the U.S. dollar on the defensive, boosting the appeal of non-yielding bullion.
Despite upbeat U.S. labor market data, including Tuesday’s Job Openings and Labor Turnover Survey (JOLTS) showing 7.39 million openings—surpassing both forecasts and March’s figure—the greenback remained under pressure. Declining U.S. Treasury yields and projections of at least two quarter-point rate cuts by year-end have tempered bullish momentum for the dollar.
Concerns over the U.S. fiscal outlook also weigh on investor sentiment. President Trump’s flagship tax and spending bill is expected to significantly increase the budget deficit, adding further strain to the dollar’s performance.
Fed Officials Urge Patience on Rate Cuts
Federal Reserve officials struck a cautious tone this week. Atlanta Fed President Raphael Bostic stated that the central bank should remain patient, warning that core inflation remains persistent and does not currently warrant aggressive rate cuts. Still, Bostic acknowledged a potential scenario for one rate cut in 2025, depending on how the economy evolves.
Chicago Fed President Austan Goolsbee echoed this measured approach, highlighting that the inflationary effects of tariffs may not surface immediately. Similarly, Fed Governor Lisa Cook warned that ongoing trade policies could push the U.S. economy into a stagflation environment, combining elevated inflation with sluggish growth.
Gold Benefits from Uncertainty, But Risk Appetite Caps Gains
While geopolitical tensions and dovish Fed expectations support gold, the broader risk-on sentiment in global markets continues to limit substantial upside. Investors are closely monitoring upcoming economic indicators for further direction, especially the ADP private-sector employment report and the ISM Services PMI.
Market attention is also focused on Friday’s expected call between President Trump and President Xi, as fears of a renewed U.S.-China trade war grow. The trade-related risk premium remains a key driver of gold demand.
Technical Outlook: Bulls Eye Breakout Targets
From a technical standpoint, gold’s breakout above the $3,324–$3,326 resistance range earlier this week has paved the way for further gains. Momentum indicators on daily and hourly charts remain positive, suggesting that the path of least resistance is to the upside. Immediate resistance is seen near the $3,380 mark, with a potential rally toward $3,400 and a retest of the all-time high near $3,500 if bullish momentum continues.
Conversely, any pullback below $3,355 could trigger fresh dip-buying, with solid support seen around the $3,326–$3,324 zone. A break beneath $3,300 would expose the commodity to a deeper correction toward the $3,286–$3,285 support level.
Market Outlook
In the short term, speeches from key Federal Open Market Committee (FOMC) members and the release of Nonfarm Payrolls (NFP) data later this week will likely be decisive for the U.S. dollar’s trajectory and gold’s near-term direction. Until then, traders are expected to maintain a cautious stance, with gold remaining buoyed by ongoing trade and monetary policy uncertainty.
