Gold (XAU/USD) extended its decline on Tuesday, facing strong follow-through selling after modest losses in the previous session. A rebound in the U.S. Dollar and easing trade tensions between the United States and the European Union weighed on the safe-haven asset, pushing prices lower from the over two-week highs reached last Friday.
Investor sentiment improved after U.S. President Donald Trump announced a delay in the implementation of proposed 50% tariffs on EU imports, moving the deadline from June 1 to July 9. The move, following a call with European Commission President Ursula von der Leyen, offered relief to global markets and reduced demand for defensive assets like Gold.
Despite the improved mood, several underlying concerns persist. Investors remain cautious over the broader implications of Trump’s trade policies, ongoing U.S.-China tensions, and a deteriorating U.S. fiscal outlook. Additionally, heightened geopolitical risks—including Russia’s largest aerial assault on Ukraine since the start of its full-scale invasion and continued Israeli airstrikes in Gaza—are likely to lend some support to the precious metal.
The proposed “Big, Beautiful Bill,” which passed the House and awaits a Senate vote, is projected to add approximately $4 trillion to the federal primary deficit over the next decade. These fiscal concerns could curb the U.S. Dollar’s gains and support non-yielding assets like Gold.
Market expectations that the Federal Reserve could ease monetary policy further this year are also acting as a limiting factor for the Dollar. With signs of easing inflation, traders are pricing in at least two 25 basis point rate cuts by year-end, keeping the greenback subdued near monthly lows and offering a tailwind to Gold.
Technical indicators suggest the metal is testing key support levels. A decisive break below the $3,300 psychological level and the 100-period Simple Moving Average (SMA) on the 4-hour chart could trigger deeper declines. On the upside, immediate resistance lies around the $3,325–$3,326 zone, followed by a more significant barrier at $3,366. A sustained rally beyond these levels could propel Gold toward the $3,400 mark, with further resistance seen near $3,430 and then $3,465–$3,470, en route to the all-time high of $3,500 recorded in April.
Looking ahead, traders are awaiting key U.S. macroeconomic data releases. Tuesday’s focus is on Durable Goods Orders and the Consumer Confidence Index, while Wednesday’s release of the Federal Open Market Committee (FOMC) minutes is expected to provide crucial insights into the Fed’s policy outlook. The week will conclude with Q1 GDP figures and the PCE Price Index, both of which could trigger significant market volatility in the XAU/USD pair.
