Gold price surges on US-EU trade tensions after US President Donald Trump announced plans to impose 50% tariffs on European imports starting June 1. The move has reignited fears of a full-blown transatlantic trade war, sparking risk-off sentiment across global markets. As investors seek safety, XAU/USD jumped above $3,350, further fueled by a weakening US Dollar and ongoing geopolitical negotiations involving Ukraine and Iran.
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US-EU Trade War Threat Escalates
Speaking just hours before Wall Street opened, President Trump stated that trade discussions with the EU were “going nowhere” and warned of sweeping tariffs that could take effect within days. US Treasury Secretary Scott Bessent reinforced the administration’s position, criticizing the EU’s trade proposals as inferior to those of other US partners.
This renewed trade hostility has injected fresh uncertainty into financial markets, increasing volatility and pushing investors toward traditional safe havens like gold.
Declining US Dollar Boosts Gold Prices
Alongside geopolitical concerns, the US Dollar Index (DXY) dropped 0.66% to 99.24, marking its lowest level since March 2025. The yield on the 10-year US Treasury note also fell nearly three basis points to 4.505%, while real yields slipped to 2.165%.
This decline in yields and USD strength provided additional support for gold, which typically benefits from a softer dollar environment, especially during periods of heightened global risk aversion.
Mixed US Data and Dovish Fed Commentary
April’s US economic indicators painted a mixed outlook:
- Building Permits dropped by 4% month-over-month, from 1.481 million to 1.422 million.
- Conversely, New Home Sales jumped 10.9% to 0.743 million, reflecting resilience in the housing sector.
Meanwhile, Federal Reserve officials offered cautious remarks. St. Louis Fed’s Alberto Musalem highlighted persistent supply chain uncertainties, while Chicago Fed’s Austan Goolsbee emphasized the need for patience, suggesting that further policy moves are unlikely in the near term.
XAU/USD Technical Outlook
XAU/USD extended its uptrend on Friday, climbing to $3,359. Upward momentum seems to be holding steady:
- The next key resistance levels lie at $3,400 and $3,438 (May 7 high), followed by the all-time high at $3,500.
- The RSI is trending upward with room to run before reaching overbought territory.
- On the downside, a break below $3,300 could open the door to a correction toward $3,204 (May 20 low) and the 50-day SMA at $3,199.
See more related articles:
- Gold (XAUUSD) Bounces Back Despite High Yields and Market Jitters
- USD Drops After Moody’s Credit Downgrade: EUR, JPY and Gold Reach Key Levels
Conclusion
Gold price surges on US-EU trade tensions, triggering renewed demand for safe-haven assets as investors brace for further policy fallout and macroeconomic instability. With the US debt ceiling, Fed minutes, and core inflation data ahead, market volatility is likely to remain elevated. Traders should stay alert and adjust risk management strategies accordingly to navigate the shifting macro landscape.
This article is part of the Market Reports coverage from H2T Finance, your trusted source for real-time updates, macro insights, and actionable Forex market reports.
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