Gold prices rose more than 0.80% on Wednesday during North American trading, driven by weak U.S. economic data and rising geopolitical tensions. Spot gold (XAU/USD) traded at $3,382 after touching a daily low of $3,343.
The rally came after several signs pointed to a cooling U.S. economy. Business activity slowed, and job growth missed expectations, prompting investors to move into safe-haven assets like gold.
Tensions between the U.S. and China also helped lift gold prices. Concerns about the progress of trade talks between Washington and Beijing, combined with signs of economic softness in the U.S., added to the bullish momentum.
Adding to the market uncertainty, U.S. President Donald Trump signed an executive order to double tariffs on steel and aluminum—from 25% to 50%—effective June 4. The move came just before a scheduled phone call between Trump and Chinese President Xi Jinping later in the week.
Weak U.S. Data Spurs Fed Speculation
Fresh data on Wednesday pointed to further economic slowdown. The Institute for Supply Management (ISM) reported that the U.S. services sector contracted in May for the first time in nearly a year. Meanwhile, the ADP National Employment Report showed private-sector hiring slowed sharply, with just 37,000 jobs added in May—well below the forecast of 110,000 and April’s revised 60,000.
In response, President Trump criticized Federal Reserve Chair Jerome Powell, saying the Fed has been too slow to cut interest rates. While Fed officials have said they remain cautious about restarting rate cuts, markets are beginning to price in further easing. The impact of rising tariffs remains uncertain, but could push inflation higher.
Investors are now watching upcoming labor data closely. Initial Jobless Claims for the week ending May 31 are due Thursday, followed by the key Nonfarm Payrolls report on Friday.
Gold Surges as Dollar and Yields Fall
Gold’s gains were supported by a broad sell-off in the U.S. dollar and falling bond yields. The U.S. Dollar Index (DXY), which tracks the greenback against six major currencies, fell 0.44% to 98.81.
At the same time, U.S. Treasury yields dropped sharply. The benchmark 10-year yield declined by 7.5 basis points to 4.383%, and real yields also fell to 2.063%. Lower yields reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive.
Money markets are now pricing in 54 basis points of rate cuts by the end of the year, according to Prime Market Terminal data.
Technical Outlook: Gold Bulls Eye $3,400 Breakout
Gold remains in an upward trend, although buyers have so far failed to break through the weekly high of $3,392. Technical indicators, including the Relative Strength Index (RSI), suggest bullish momentum remains strong.
If XAU/USD breaks above the $3,400 level, it could open the way for a test of the May 7 high at $3,438. Beyond that, key resistance levels include $3,450 and the all-time high of $3,500.
On the downside, a drop below $3,300 could bring more selling pressure. The next support lies at the 50-day Simple Moving Average (SMA) of $3,235, followed by the April 3 high-turned-support at $3,167.
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