Gold prices climbed sharply on Wednesday, gaining over 0.80% during the North American trading session as investors reacted to disappointing U.S. economic data and heightened geopolitical tensions. Spot gold (XAU/USD) rose to $3,382 after touching an intraday low of $3,343.
Weaker-than-expected economic indicators from the United States fueled the rally in the precious metal, traditionally viewed as a safe haven during market uncertainty. Fresh concerns over U.S.-China trade relations also contributed to bullish sentiment.
U.S. President Donald Trump signed an executive order earlier in the day to double tariffs on steel and aluminum imports from 25% to 50%, effective immediately. The move came ahead of a scheduled phone call with Chinese President Xi Jinping, intensifying fears of a renewed trade conflict.
Economic data released Wednesday reinforced concerns about a slowing U.S. economy. The Institute for Supply Management (ISM) reported that the services sector contracted for the first time in nearly a year, with the PMI falling from 51.6 in April to 49.9 in May—well below forecasts of 52.0. Meanwhile, the ADP National Employment Report showed private payrolls rose by just 37,000 in May, missing expectations of 110,000 and down from April’s revised figure of 60,000.
In response to the economic downturn, President Trump criticized Federal Reserve Chair Jerome Powell for acting too slowly on interest rate cuts. However, Fed officials have signaled a cautious stance on further easing, citing uncertainties over tariff impacts and inflation pressures.
Markets are now focused on upcoming U.S. labor data, with Initial Jobless Claims due Thursday and the closely watched Nonfarm Payrolls report scheduled for Friday.
Market Movers: U.S. Dollar Falls, Treasury Yields Drop
The U.S. Dollar weakened on Wednesday, providing further support for gold. The U.S. Dollar Index (DXY), which measures the greenback against six major currencies, fell 0.44% to 98.81.
U.S. Treasury yields also declined, reflecting investor concern over the economic outlook. The 10-year Treasury yield dropped 7.5 basis points to 4.383%, while real yields declined to 2.063%. Lower yields reduce the opportunity cost of holding non-yielding assets like gold.
According to Prime Market Terminal data, money markets are now pricing in 54 basis points of interest rate cuts by the end of the year.
Technical Outlook: Gold Maintains Bullish Trend, Faces Resistance Near $3,400
Gold remains in a bullish trend, though upward momentum paused near resistance at $3,392, the high for the current week. The Relative Strength Index (RSI) indicates buying strength remains intact.
A break above $3,400 could open the door to further gains, with the next resistance levels at the May 7 peak of $3,438, followed by $3,450 and the all-time high of $3,500.
On the downside, a drop below $3,300 could signal a bearish shift, potentially pushing prices toward the 50-day Simple Moving Average at $3,235 and the April 3 support level at $3,167.
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