Gold prices (XAU/USD) slipped slightly during Monday’s Asian session as US President Donald Trump postponed the implementation of a 50% tariff on the European Union from June 1 to July 9. This move curtailed fresh bullish momentum following last week’s sharp 5% rally. Yet, significant downside appears limited amid ongoing concerns over deteriorating US fiscal health and expectations that the Federal Reserve will cut interest rates in 2025—factors that continue to weigh on the US Dollar and provide support for non-yielding gold.
Persistent geopolitical tensions, including the protracted Russia-Ukraine conflict and ongoing unrest in the Middle East, also underpin the yellow metal, restricting deeper losses. Market participants are likely to await stronger selling pressure or confirmatory signals before concluding that gold’s recent upward trend has stalled. Attention now turns to this week’s FOMC meeting minutes and key US economic data releases, such as the Personal Consumption Expenditure (PCE) Price Index, to gauge the next directional move.
Trade Optimism Limits Gold’s Downside
In a dramatic policy reversal, President Trump delayed tariffs on the EU after European Commission President Ursula von der Leyen expressed readiness to engage in expedited trade talks but requested more time to finalize a deal. Meanwhile, concerns over the US fiscal outlook deepen as Trump’s proposed tax cuts and spending package—adding an estimated $4 trillion to the federal deficit over the next decade—face Senate scrutiny this week.
Softer US inflation data, with Consumer Price Index (CPI) and Producer Price Index (PPI) figures below expectations, have fueled market bets on at least two Fed rate cuts later this year. Minneapolis Fed President Neel Kashkari highlighted the stagflation risk posed by extended tariffs, amplifying uncertainty around economic growth. The US Dollar remains in a two-week decline, hitting a fresh monthly low, which lends further support to gold.
Geopolitical Risks Keep Gold Supported
Meanwhile, Russia’s largest-ever drone and missile assault on Ukrainian cities intensified the war’s impact, with Trump condemning the attack and signaling possible new sanctions. Ongoing Israeli military strikes in Gaza sustain geopolitical tensions, reinforcing safe-haven demand for gold.
Technical Outlook: Dip-Buying Expected Near $3,325
Technically, gold’s recent ascent along an ascending trendline and bullish momentum indicators suggest continued near-term strength. Any pullback is likely to find solid support near $3,325. A decisive break below this level could trigger further selling toward the $3,300 mark and potentially down to the 200-period simple moving average on the 4-hour chart near $3,283, a critical support zone.
Conversely, surpassing last Friday’s swing high around $3,366 could renew bullish momentum, paving the way for gold to reclaim $3,400. Further resistance lies near $3,430, with an ultimate target around the psychological $3,500 peak touched in April, facing intermediate hurdles near $3,465–$3,470.
