- Gold price drifts lower for the second straight day and is pressured by a combination of factors.
- The optimism around the EU’s tariff delay and a modest USD rebound undermines the commodity.
- US fiscal concerns and Fed rate cut bets should cap the USD and limit losses for the XAU/USD pair.
Gold price (XAU/USD) attracted some sellers for the second straight day on Tuesday as the optimism led by US President Donald Trump’s decision to delay imposing tariffs on the European Union (EU) underpins demand for safe-haven assets. Apart from this, a modest US Dollar (USD) rebound from the vicinity of the monthly low turns out to be another factor exerting downward pressure on the commodity.
However, the uncertainty around Trump’s trade policies keeps a lid on the optimism. Furthermore, growing market concerns that Trump’s sweeping tax cuts and spending bill would worsen the US budget deficit, along with expectations that the Federal Reserve (Fed) will lower borrowing costs further in 2025, might cap the USD. This, in turn, warrants caution before placing aggressive bearish bets around the Gold price.
Daily Digest Market Movers: Gold price is weighed down by trade optimism
- US President Donald Trump agreed on Sunday to postpone the proposed 50% tariffs on the European Union from June 1 until July 9. The announcement followed a call with EU President Ursula von der Leyen, who said that the bloc was ready to move quickly in trade talks with the US but needed more time to strike a deal.
- The development offered some relief to markets, though investors remain on edge amid the uncertainty surrounding Trump’s trade policies and deep-rooted tensions between the US and China – the world’s two largest economies. Apart from this, US fiscal concerns and geopolitical risks could lend support to the Gold price.
- Trump’s dubbed “Big, Beautiful Bill”, which would add an estimated $4 trillion to the federal primary deficit over the next decade, was passed in the lower house last week and will be voted on in the Senate this week. This fuels worries that the US budget deficit could worsen at a faster pace than previously expected.
- Meanwhile, signs of easing inflationary pressure in the US lifted market bets that the Federal Reserve will eventually step in to support economic growth. In fact, traders are pricing in the possibility of at least two 25 basis point Fed rate cuts by the year-end, which keeps the US Dollar depressed near the monthly low.
- Russia launched the largest aerial assault since its full-scale invasion of Ukraine in February 2022. In response, Trump said that he was considering new sanctions against Russia and called Russian President Vladimir Putin crazy. Moreover, the continuous Israeli strikes on Gaza keep the geopolitical risk in play.
- Traders now look forward to Tuesday’s US macro releases– Durable Goods Orders and the Conference Board’s Consumer Confidence Index. The focus, however, will be on FOMC minutes, due on Wednesday, which might offer some cues about the Fed’s rate-cut path and provide some impetus to the USD.
- This week’s US economic docket also features the release of the Prelim Q1 GDP and the Personal Consumption Expenditure (PCE) Price Index on Thursday and Friday, respectively. This, in turn, should infuse some volatility around the XAU/USD pair and allow traders to grab meaningful opportunities.
Gold price could test 100-period SMA on H4, trend-line support breakdown in play
From a technical perspective, the commodity currently flirts with short-term ascending trend-line support. Some follow-through selling and a subsequent break below the overnight swing low, around the $3,324-3,323 region, could drag the Gold price to the $3,300 round figure. The latter nears the 100-period Simple Moving Average (SMA) on the 4-hour chart, which if broken decisively should pave the way for deeper losses.
On the flip side, Friday’s swing high, around the $3,366 area, now seems to act as an immediate barrier. A sustained strength beyond will be seen as a fresh trigger for bulls and allow the Gold price to reclaim the $3,400 mark. The next relevant hurdle is seen near the $3,430 region, above which the XAU/USD could surpass an intermediate resistance around the $3,465-3,470 zone and challenge the all-time peak, around the $3,500 psychological mark touched in April.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.16% | 0.14% | 0.34% | 0.07% | 0.41% | 0.55% | 0.21% | |
| EUR | -0.16% | -0.03% | 0.18% | -0.08% | 0.18% | 0.29% | 0.03% | |
| GBP | -0.14% | 0.03% | 0.21% | -0.06% | 0.18% | 0.32% | 0.01% | |
| JPY | -0.34% | -0.18% | -0.21% | -0.24% | 0.07% | 0.13% | -0.13% | |
| CAD | -0.07% | 0.08% | 0.06% | 0.24% | 0.31% | 0.38% | 0.07% | |
| AUD | -0.41% | -0.18% | -0.18% | -0.07% | -0.31% | 0.03% | -0.27% | |
| NZD | -0.55% | -0.29% | -0.32% | -0.13% | -0.38% | -0.03% | -0.34% | |
| CHF | -0.21% | -0.03% | -0.01% | 0.13% | -0.07% | 0.27% | 0.34% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).