Gold prices (XAU/USD) edged higher during early European trading on Monday, rebounding modestly after two consecutive days of losses. The precious metal found support as the US dollar faltered, weighed down by mounting fiscal concerns and a fresh decline in US Treasury yields.
The yellow metal briefly dipped below the $3,300 mark—its lowest level in a week—but attracted renewed buying interest, thanks in part to ongoing geopolitical tensions and persistent uncertainties surrounding global trade. These safe-haven factors helped offset bearish pressure stemming from Friday’s robust US employment report.
Weaker Dollar Supports Gold Despite Strong Jobs Data
The US dollar failed to sustain the momentum from Friday’s session, undermined by concerns over the US government’s fiscal health and falling bond yields. These conditions provided a tailwind for gold, even as last week’s strong labor market data reduced expectations of imminent interest rate cuts by the Federal Reserve.
The US Bureau of Labor Statistics reported that Nonfarm Payrolls increased by 139,000 in May—slightly above forecasts of 130,000, though lower than April’s downwardly revised 147,000. The unemployment rate held steady at 4.2%, while average hourly earnings remained at 3.9%, surpassing expectations of 3.7%.
Following the report, US President Donald Trump renewed calls for the Federal Reserve to cut interest rates by a full percentage point, intensifying pressure on Chair Jerome Powell. Despite this, market sentiment has shifted, with traders now seeing a greater likelihood of a rate cut in September rather than the near term.
Geopolitical Risks and Trade Talks Keep Gold Supported
Beyond monetary policy, global developments continue to lend support to gold. The ongoing conflict between Russia and Ukraine, amid a breakdown in peace negotiations, has kept geopolitical risks elevated. Meanwhile, investors remain cautious ahead of high-level trade talks between the United States and China.
Senior officials from both countries are scheduled to meet in London on Monday in an effort to ease tensions in the prolonged trade dispute. President Trump recently described a phone call with Chinese President Xi Jinping as “very positive,” raising hopes for progress.
Technical Outlook: Key Levels in Focus
From a technical standpoint, gold has shown resilience near the $3,300 level, which coincides with the 200-period Simple Moving Average (SMA) on the 4-hour chart. Analysts suggest that a clear break below this level would be necessary for further downside momentum, potentially opening the door to a drop toward the $3,245 area, last seen on May 29.
Conversely, any significant upward move is expected to face resistance around the $3,352–$3,353 zone. A sustained breakout above this range could pave the way for a short-covering rally toward $3,400 and potentially the all-time high near $3,500 set in April.
