Gold price (XAU/USD) surged on Thursday, closing at a fresh four-week intraday high near $3,400. Prices pushed higher due to a return of safe-haven flows amid the continued risks in US-China trade relations worsening, and the prospect of slowing growth, with the recent U.S. economic indicators being weaker than forecast.
The overall market environment has shifted to a risk-off sentiment, as investors have shifted their focus to Gold amid growing uncertainty and some raised expectations for an interest rate cut by the Federal Reserve in July.
Trump’s Comments Shake Confidence in US-China Trade Deal
Safe-haven demand for gold surged after US President Donald Trump expressed doubts about reaching a trade agreement with China, stating on Truth Social that while he likes President Xi, he is “very tough and extremely hard to make a deal with.” This renewed uncertainty surrounding US-China trade relations has shaken investor confidence, fueling concerns over global economic stability and driving increased interest in gold as a protective asset.
Weak US Jobs and Services Data Fuel Fed Rate Cut Bets
Gold’s bullish momentum was also reinforced by soft US economic indicators, which pushed Treasury yields to their lowest levels in a month. The ADP Employment Change report revealed only 37K jobs added in May, far below the market forecast of 115K.
Further dragging on sentiment, the ISM Services PMI showed an unexpected decline, suggesting reduced service sector demand—a red flag for an economy that relies heavily on services.
These data points triggered a decline in the 10-year US Treasury yield to 4.35%, making non-yielding assets like Gold more attractive.
Gold Holds Firm Above $3,335 Support
From a technical standpoint, gold remains in a bullish trend, trading comfortably above its upward-sloping trendline originating from the December 12 high of $2,726, with strong support near $3,335.
The 20-day EMA, currently around $3,317, continues to slope upward, reinforcing positive momentum, while the 14-day RSI hovers near 60, suggesting further upside potential if it breaks higher.
Key resistance levels to watch are the May 7 high at $3,440 and the psychological $3,500 mark, whereas downside support lies at the May 29 low of $3,245, followed by the round number $3,200 and the May 15 low of $3,121.
Conclusion
With trade war rhetoric returning and weak labor and services data weighing on the US Dollar and bond yields, Gold is positioned strongly as a safe-haven asset. Investors will closely monitor Friday’s Nonfarm Payrolls (NFP) for further clarity on the Fed’s policy direction. If soft data continues, XAU/USD could push beyond $3,440, eyeing the $3,500 level next.
About The Author
