Gold (XAU/USD) is finding renewed demand in early trading, setting its sights on the recent two-week high of $3,365/oz reached last Friday. With investors remaining cautious ahead of upcoming U.S. economic data and ongoing trade developments, the yellow metal appears poised to resume its uptrend toward record highs.
Fundamentals Supporting Gold’s Rise
Gold is currently benefiting from persistent U.S. Dollar weakness, driven by:
Mounting U.S. fiscal concerns
Anticipation of Federal Reserve rate cuts
Ongoing geopolitical tensions
U.S. Fiscal Health in Focus
Last week, the U.S. House of Representatives passed President Donald Trump’s sweeping tax cuts and spending bill, which the CBO estimates will add $3.8 trillion to the national debt over the next decade. This follows a Moody’s downgrade of the U.S. sovereign credit rating on May 16, further denting investor confidence in U.S. assets, including the dollar and Treasuries.
Fed Policy Expectations
Investor sentiment around the U.S. Treasury market remains cautious, with yields pressured by increasing expectations that the Federal Reserve will maintain a dovish stance throughout 2025.
Minneapolis Fed President Neel Kashkari added to those expectations, warning on Monday that extended tariffs risk triggering stagflation — a scenario of sluggish growth and high inflation, which typically favors gold as a hedge.
Geopolitical Tensions and Trade Uncertainty Add Support
Gold continues to draw safe-haven demand amid:
Ongoing Russia-Ukraine conflict
Heightened tensions between Iran and the U.S. over nuclear policy
Trump’s trade policies, which remain unpredictable
Although gold pulled back on Monday following Trump’s delay of the 50% tariffs on EU imports to July 9, the reprieve is temporary, and traders remain alert for further headlines that could reignite risk aversion.
Upcoming Market Drivers
While the U.S. Durable Goods Orders and Consumer Confidence data releases today could impact short-term dollar sentiment, the broader focus remains on U.S. fiscal policy debates and trade developments, which are expected to guide the medium-term direction for gold.
Technical Outlook – Daily Chart
From a technical perspective:
Gold is consolidating above key support near $3,320/oz
A break above last Friday’s high of $3,365 could open the path to retest $3,400, with the all-time high near $3,433 still in sight
Key support levels lie at $3,320, followed by $3,285
The broader bullish trend remains intact, supported by soft dollar conditions and geopolitical uncertainty
Bottom Line
Gold appears well-positioned for further gains, driven by:
Ongoing de-dollarization trends
Central bank gold purchases
Weakening U.S. economic fundamentals
Persisting safe-haven flows
Unless there is a sudden reversal in fiscal or geopolitical narratives, XAU/USD could soon resume its climb toward new record highs.
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