Insights 
VT 
Gold prices rose by nearly 2% daily and 5% throughout the week, as the US Dollar weakened. XAU/USD reached $3,359, recovering from a low of $3,287.
Donald Trump intensified trade tensions with the EU, threatening 50% tariffs on June 1st. The ‘One Big Beautiful Bill’ passed the US House, potentially increasing the debt ceiling by nearly $4 trillion.
Geopolitical Tensions
A ceasefire memorandum in Ukraine is reportedly progressing, while US-Iran nuclear talks continued in Rome. May’s US housing data showed mixed results, with building permits down but new home sales rising.
The upcoming US economic schedule includes Durable Goods Orders, GDP estimates, and the Core PCE Price Index. The US Dollar Index fell 0.66%, benefiting gold prices.
Gold targets $3,400 following the Moody’s downgrade of US debt from AAA to AA1. The RSI indicates strong bullish momentum, aiming for resistance levels at $3,400, $3,438, and a high of $3,500.
If gold falls below $3,300, it could move towards the $3,204 level, near the 50-day SMA at $3,199. Trade wars typically involve economic conflict due to protectionism, escalating import costs and living expenses.
Impact Of Trade War
The US-China trade war began in 2018, with tariffs affecting numerous industries. Speculation about renewed tensions has emerged with tariff proposals impacting the global economy.
The article lays out a clear shift in gold’s short-term trajectory, underpinned by a weaker US Dollar and increased geopolitical tensions. When the greenback falls—this time losing 0.66%—it makes dollar-denominated assets like gold cheaper for foreign buyers. That’s often a trigger for buying and helped XAU/USD bounce back from $3,287 to $3,359, a striking 5% rise over the week. A gain that orderly rarely happens without ongoing market anxieties.
Trump’s statements regarding a potential 50% tariff on European cars are likely to stir cautious reactions across commodities and FX. This type of rhetoric doesn’t just increase volatility—it forces a reassessment of near-term assumptions. Risk-off behaviour grows common when these kinds of political developments become more than hollow threats. It’s not about the tariffs themselves yet; it’s about escalating tensions that shake investor confidence and tilt demand toward perceived safe havens.
The latest US bill pushing the debt ceiling higher by nearly $4 trillion shouldn’t be interpreted as business-as-usual fiscal policy. Moody’s decision to strike the US down a notch—from AAA to AA1—shook markets. That downgrade didn’t take place in isolation. These large spending shifts feed into inflationary risks, which many thought were behind us. They’re not.
We also can’t overlook the ongoing talks between Tehran and Washington, or the Ukraine developments. Even when they are just memorandums in draft form or quiet negotiations overseas, they can drive sentiment rapidly, particularly when safe-haven demand builds up. News of progression, regardless of finality, tends to pull money out of riskier assets.
Meanwhile, economic signals like the housing data in May were muddled but worth dissecting. Fewer building permits suggest developers are wary, but sales of new homes are up. That contrast doesn’t reduce uncertainty—it intensifies it. Add to that the looming release of Durable Goods Orders and GDP estimates next week, and we are likely to see choppier reactions, especially around the Core PCE Price Index. The latter is closely watched by US monetary policy setters and could tweak expectations about interest rate moves later this year.
Reserve levels in gold aren’t just symbolic. According to the RSI reading, momentum still leans bullish. It’s pushing into overbought conditions, yes, but not extreme. The market is eyeing $3,400 as a resistance level, followed by $3,438 and $3,500. These are not arbitrary. Those levels are based on prior tops and Fibonacci extensions, all active targets right now.
Meanwhile, downside positions should remain cautious below $3,300. Price slipping under that threshold would open a path towards $3,204, aligned with prior support and very close to the 50-day simple moving average at $3,199. Momentum fading could signal the start of mean-reversion, especially if yields firm up or geopolitical noise dies down.
Trade war rhetoric should not be treated lightly. As highlighted back in 2018 with the US-China impasse, tariffs have the power to shift market structures quickly. Protectionist policies tend to ripple well beyond their intended targets. Costs rise. Imports shrink. Inflation overall gets harder to control.
So, in the current environment, caution isn’t just advice—it’s implied by the weekly and daily candles. We’ll watch price action around the PCE catalyst first. Then see how durable those resistance touches really are.
