Gold prices rose sharply on Tuesday, climbing above $3,300 per ounce as investor anxiety grew over the U.S. fiscal outlook and escalating geopolitical tensions. The precious metal traded at $3,317 during afternoon sessions, rebounding from an intraday low of $3,285.
Investor sentiment remained cautious as major U.S. stock indices posted losses and Treasury yields moved higher. Market participants are closely watching developments in Washington, where lawmakers are set to vote on President Trump’s tax-cut proposal. The Congressional Budget Office (CBO) has warned that the bill could add nearly $3.8 trillion to the national debt.
While passage of the bill could provide a short-term lift to equities, the implications for the U.S. dollar remain uncertain. The greenback continues to reel from Moody’s recent downgrade of U.S. government debt from AAA to AA1, a move that triggered broad selling pressure. The U.S. Dollar Index (DXY), which tracks the dollar against six major currencies, slipped 0.52% to 99.49—lending support to gold.
In addition to domestic fiscal concerns, rising tensions in the Middle East are contributing to gold’s appeal as a safe-haven asset. CNN reported Tuesday that Israel is preparing for a potential strike on Iranian nuclear facilities, further heightening geopolitical risks. Meanwhile, relations between the U.S. and China appear to be stabilizing, with both countries agreeing to reduce tariffs for 90 days to facilitate trade negotiations.
This week, investors will monitor a range of U.S. economic indicators, including Federal Reserve speeches, Flash Purchasing Managers’ Indexes (PMIs), housing data, and initial jobless claims.
Yields Rise as Debt Concerns Mount
Yields on U.S. Treasury securities surged, with the benchmark 10-year note rising 9.5 basis points to 4.58%. Real yields also advanced by the same margin, reaching 2.229%. The rise in yields follows the downgrade by Moody’s and growing market apprehension over America’s ballooning debt levels.
Federal Reserve officials on Tuesday signaled that current monetary policy remains appropriate, although they acknowledged that increasing import tariffs could stoke inflation. Analysts believe this may support the case for maintaining or even raising interest rates in the near term.
Traders on the Chicago Board of Trade (CBOT) are pricing in roughly 48.5 basis points of rate cuts by the end of the year.
Technical Outlook: Gold Eyes $3,350 as Momentum Builds
Gold extended its rally into a third consecutive session, with the technical setup indicating further gains. The spot price has recorded a series of higher highs and higher lows, suggesting bullish momentum remains intact. The Relative Strength Index (RSI) is rising but has not yet entered overbought territory, signaling more room for the rally to run.
Immediate resistance is seen at the psychological level of $3,350. A break above this level could pave the way toward $3,400 and the May 7 high of $3,438. Beyond that, the all-time high of $3,500 looms as the next major target.
On the downside, a reversal below $3,300 would open the door to support at $3,204—the May 20 low—followed by the 50-day Simple Moving Average (SMA) at $3,184.
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