Gold price sits near two-week high, above $3,300 on weaker USD and reviving safe-haven demand.

Gold price scales higher for the third straight day amid sustained USD selling bias.
US fiscal concerns and Fed rate cut bets drag the USD to a nearly two-week trough.
US-China trade tensions and geopolitical risks further benefit the XAU/USD pair.

Gold price (XAU/USD) maintains its bid tone through the early European session on Wednesday and sits near a one-and-a-half-week top amid a combination of supporting factors. Investors now seem convinced that the Federal Reserve (Fed) will cut rates further in 2025 amid signs of easing inflationary pressures and a sluggish economic outlook. Apart from this, US fiscal concerns and a downgrade of the US government’s sovereign credit rating drag the US Dollar (USD) to a two-week low, which, in turn, underpins the commodity.

Apart from this, renewed US-China trade tensions and persistent geopolitical risks turn out to be other factors driving flows towards the Gold price. The follow-through move up could further be attributed to some technical buying following the previous day’s breakout through the $3,250-3,255 resistance. A subsequent move and acceptance above the $3,300 mark favors the XAU/USD bulls. In the absence of any relevant market-moving US economic data, this further supports prospects for an extension of a three-day-old weekly uptrend.

Daily Digest Market Movers: Gold price draws support from sustained USD selling and renewed US-China trade tensions

US President Donald Trump pushes the House GOP to pass his sweeping tax bill, which could add $3 trillion to $5 trillion to the country’s already hefty debt pile. This comes after Moody’s downgraded the US government’s credit rating last Friday, citing escalating deficits, which continue to weigh on the US Dollar and lift the Gold price above the $3,300 mark on Wednesday.
Federal Reserve officials on Tuesday raised concerns around the US economic outlook amid the uncertainty tied to Trump’s trade policies. In fact, Cleveland Fed President Beth Hammack sees rising odds of a stagflation scenario and said that the uncertainty over US government trade policies makes it increasingly difficult for policymakers to manage the economy.
Separately, St Louis Fed President Alberto Musalem noted that businesses and households are holding back from decisions amid uncertainty, which could affect the economic outlook. Adding to this, Atlanta Fed President Raphael Bostic warned that the US economy is going to see a slowdown in activity, and how consumers will respond to another round of inflation.
Data released last week pointed to signs of easing inflation, while the disappointing US monthly Retail Sales figure increased the likelihood of several quarters of sluggish growth. This should allow the Fed to stick to its policy easing bias. Moreover, traders are currently pricing in the possibility of at least two 25-basis-point rate reductions by the end of this year.
China accused the US of abusing export control measures and said that the Trump administration is violating Geneva trade agreements. In fact, the US issued guidance warning companies not to use Huawei’s Ascend AI chips. China’s Commerce Ministry said this Wednesday that US measures on advanced chips are ‘typical of unilateral bullying and protectionism.’
CNN, citing several US officials aware of the developments, reported on Tuesday that fresh intelligence gathered by the US indicates that Israel is preparing for potential strikes on Iran’s nuclear sites. This keeps geopolitical risks in play, which should provide an additional boost to the XAU/USD pair and support prospects for a further near-term appreciating move.

Gold price bulls might now aim to test the next relevant hurdle near the $3,360-3,365 region

From a technical perspective, the overnight sustained breakout above the $3,250-3,260 region, which coincided with the 200-period Simple Moving Average (SMA) on the 4-hour chart, was seen as a key trigger for bullish traders. A subsequent move beyond the $3,300 mark and positive oscillators on hourly/daily charts validate the near-term constructive outlook for the Gold price. Hence, some follow-through strength towards testing the next relevant hurdle, around the $3,360-3,365 horizontal zone, looks like a distinct possibility. The momentum could extend further and allow the XAU/USD pair to reclaim the $3,400 round figure.

On the flip side, weakness below the Asian session low, around the $3,285 region, is more likely to attract fresh buyers and remain limited near the $3,260-3,250 resistance-turned-support. A convincing break below the latter, however, might prompt some technical selling and drag the Gold price to the $3,200 mark. This is closely followed by the $3,178-3,177 support, below which the XAU/USD could accelerate the fall towards last week’s swing low, around the $3,120 area, or the lower level since April 10, en route to the $3,100 mark.

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