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Gold price (XAU/USD) consolidates near its all-time peak as investors seek safety. Concerns over US President Donald Trump's trade policies continue to drive demand for the metal. Expectations of Federal Reserve rate cuts further support gold. However, continued USD buying and improving global risk sentiment limit gains. Despite overbought conditions, gold remains on track for its second consecutive week of strong performance, with fundamentals pointing to further upside.
 

Gold Gains Strength Amid Economic and Political Uncertainty

Rising trade tensions support gold prices. President Trump has escalated the tariff war by proposing new tariffs on European goods. He demanded that the European Union remove certain trade surcharges. Earlier, he imposed tariffs on steel and aluminum imports, fueling fears of a worsening trade conflict. Uncertainty over US trade policy increases safe-haven demand for gold, pushing prices to new highs. Investors also expect the Federal Reserve to cut interest rates further to counter slowing economic growth.

US inflation shows signs of easing. The Consumer Price Index (CPI) and core CPI have both slowed, while the Producer Price Index (PPI) remains unchanged. A weakening labor market adds to the case for Fed rate cuts. Markets anticipate three rate cuts in June, July, and October. Lower interest rates reduce the opportunity cost of holding gold, boosting its appeal. However, rising global risk sentiment and a recovering US dollar limit further price gains.
 

Technical Analysis: Gold’s Performance Against the S&P 500

The provided chart compares gold’s performance against the S&P 500 (SPX) and shows a significant technical breakout. A key resistance line, previously acting as a ceiling, has been breached. The ratio has now surpassed the 0.48 level, confirming a breakout above long-term resistance. This move signals gold’s relative strength against equities.

The chart also highlights an ascending trend line, forming a solid base for gold's upward momentum. A cup-and-handle pattern has played out, further supporting bullish prospects. As the breakout holds above 0.48, the next upside target could be 0.55, provided momentum is sustained.

(Click on image to enlarge)

The recent candle shows a strong close above resistance, confirming bullish sentiment. However, traders should watch for a possible retest of the breakout zone before further gains. A sustained move above 0.50 would reinforce the uptrend, while a drop below 0.48 could indicate a false breakout.

Overall, gold's technical setup remains strong, and fundamental factors support further upside. If economic uncertainty persists, gold may continue to outperform equities in the near term.
 

Conclusion

Gold remains a preferred safe-haven asset amid ongoing trade tensions and economic uncertainties. The breakout above long-term resistance signals strong bullish momentum, while expectations of Fed rate cuts further support the metal. Although resistance near $3,000 and overbought conditions may slow the rally, the overall outlook remains positive.

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