Gold (XAU/USD) staged a modest rebound during Wednesday’s Asian session, drawing in dip-buyers after steep losses the previous day. However, the recovery lacks strong bullish momentum as traders grapple with a web of mixed economic and geopolitical signals.
Lingering uncertainty around U.S. President Donald Trump’s tariff policy, concerns over America’s fiscal trajectory, and escalating geopolitical tensions have rekindled safe-haven demand for bullion. Adding to the supportive backdrop are market expectations that the Federal Reserve may deliver at least two interest rate cuts in 2025—a scenario typically favorable for non-yielding assets like gold.
Yet, gains in the yellow metal remain capped. The U.S. Dollar is extending its upward momentum for a second consecutive day, bolstered by Tuesday’s stronger-than-expected economic data and a generally upbeat tone in equity markets. This strength is dulling gold’s appeal to international buyers and restraining its upside.
Market participants remain cautious ahead of the release of the Federal Open Market Committee (FOMC) minutes, which could provide fresh insight into the Fed’s monetary policy trajectory. Until then, traders are hesitant to place aggressive bets, keeping gold in a consolidation phase.
Key Economic Drivers:
The U.S. Census Bureau reported a 6.3% decline in Durable Goods Orders for April, marking a significant drop from the revised 7.6% rise in March. While this signals a slowdown, the reading beat expectations for a 7.9% fall. Excluding transportation, orders managed a 0.2% increase.
Meanwhile, the Conference Board’s Consumer Confidence Index soared to 98 in May, jumping 12.3 points from April’s 85.7—a sharp rebound not seen in four years. The recovery was fueled by optimism surrounding the economy and labor market following a de-escalation in U.S.-China trade tensions.
Adding to the mix, President Trump’s decision to delay the implementation of a 50% tariff on European Union imports from June 1 to July 9 provided temporary relief to markets. Still, investors remain wary amid ongoing U.S.-China friction, deteriorating fiscal conditions, and intensifying geopolitical instability.
Markets are also closely watching developments on Capitol Hill, where Trump’s “Big, Beautiful Bill”—a sweeping fiscal package including tax cuts, increased spending, and a debt ceiling hike—is set for a Senate vote. Analysts warn the bill could exacerbate the U.S. deficit by $3.8 billion, putting upward pressure on bond yields and casting a long-term shadow over the dollar.
Geopolitical Flashpoints:
On the international stage, tensions flared after Trump accused Russian President Vladimir Putin of “playing with fire” by refusing ceasefire talks with Ukraine, following Russia’s deadliest strikes since the 2022 invasion. Simultaneously, an Israeli official denied that Hamas had agreed to a U.S.-proposed ceasefire in Gaza, adding to global uncertainty.
Technical Outlook:
Gold’s price action remains precarious. Tuesday’s drop below a key ascending trendline and the 200-period Simple Moving Average (SMA) on the H4 chart signaled bearish pressure. Further downside could test the $3,250–$3,245 support zone—a pivotal area that, if breached, may trigger a deeper selloff.
On the upside, resistance lies near $3,340–$3,345, coinciding with the broken trendline. A break above this level could lead to a short-covering rally, with bulls eyeing the $3,365–$3,366 region and, ultimately, the $3,400 threshold. A sustained move above that could open the path toward $3,465–$3,470.
