Gold prices rose during the European session on Wednesday, reaching a new intraday high of around $3,324. Gold continues to find support from caution driven by investor US fiscal fears, ongoing geopolitical risks, and uncertainty surrounding trade policies in the Trump administration.
While sentiment is markedly improved over EU-US trade discussions, safe haven flows remain each day as investors wrap their minds around how tariff threats or actual tariffs will impact trading, political instability, and economic indicators that continue to weaken.
US Dollar Strength Caps Gold’s Upside
Although gold is holding up well due to risk-off sentiment, gains are limited by a modest move higher in the US Dollar Index (DXY) which is trading around 99.80. The USD is being supported by strong consumer confidence data and easing tensions around US-China trade, which sent household sentiment rising to a four-year high in May.
However, elevated concerns around the US budget deficit and expectations of at least two Fed rate cuts in 2025, limit aggressive buying of the dollar and allow for gold to maintain continued support above the key $3,300 level.
Traders Eye FOMC Minutes and Key US Data
Investment sentiment remains cautious ahead of the Federal Reserve’s FOMC meeting minutes, which are expected to shed light on the central bank’s monetary policy stance. The market is anticipating guidance around the time frame and magnitude of potential interest rate cuts.
Outside of the FOMC minutes the market is shifting focus toward important U.S. economic data scheduled later this week. Thursday’s Preliminary Q1 GDP report, and Friday’s Personal Consumption Expenditures (PCE) Price Index, will be scrutinized for signs of economic strength or inflationary pressures as these variables may play a role in investor sentiment and shape expectations around the Fed’s next moves.
Gold Clings to Bullish Bias
Technically, gold is still in a long-term uptrend, even after the recent corrections. It is turning up from the 200-period Simple Moving Average (SMA) on the 4-hour chart and holding above the key psychological support area of $3,300. Upside momentum is beginning to fade, but the indicators are not yet fully signaling ba earish reversal.
Key Technical Levels:
- Support: Immediate support is seen at $3,300, followed by a strong demand zone near $3,245–$3,250.
- Resistance: On the upside, resistance is aligned at $3,345, the previous trendline breakdown level, followed by $3,365–$3,366.
A decisive break above $3,366 could open the door for a rally toward $3,400, with the next key resistance near the $3,470 mark.
Gold Holds Ground with Eyes on Fed and Fiscal Risks
While trade sentiment may have been positive and the US dollar is somewhat stronger, gold remains a buy due to fiscal instability and geopolitical tension. The market will be waiting for more clarity from the FOMC minutes and XAU/USD remains supported above the $3,300 handle and could make a run higher on any further macro risk.
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