Photo by Dmitry Demidko on Unsplash
 

Gold (XAUUSD) continues to trade with strength as investors respond to rising fiscal concerns and political uncertainty in the US. The metal also benefits from a weakening US Dollar and growing fears of trade tensions. Market participants anticipate that the Federal Reserve will soon cut interest rates. These factors are driving demand for gold as a safe haven. Traders now await key US economic data to confirm the next move.
 

Gold Rises as US Dollar Slips on Fiscal Worries and Trade Uncertainty

Gold is gaining ground as market sentiment remains favourable to the precious metal. The US Dollar is under pressure, dropping to its lowest levels since February 2022. This weakness is fueled by rising concerns over the ballooning US fiscal deficit, following the Senate's passage of Trump’s massive $3.3 trillion spending bill. As fears about government debt mount, investors are turning to gold as a safe-haven asset, further weakening the greenback and boosting gold prices.

Trade tensions are also adding to gold's appeal. President Trump has threatened to impose higher tariffs on several countries if trade talks stall. His administration is preparing to finalise new tariff rates, raising fears of a renewed global trade war. This uncertainty is prompting investors to seek safer assets, with gold emerging as a reliable hedge against geopolitical and economic instability.

Meanwhile, Trump is also increasing pressure on the Federal Reserve to lower interest rates. In a handwritten note to Chair Jerome Powell, he urged more aggressive rate cuts. This comes shortly after data revealed a surprising decline in consumer spending for May. As a result, markets are now pricing in a 74% probability of a Fed rate cut in September. Gold remains firm as traders stay cautious ahead of crucial US economic reports. Key releases include Tuesday’s ISM Manufacturing PMI and JOLTS, followed by the highly anticipated Nonfarm Payrolls (NFP) report on Thursday.
 

Technical Analysis: Gold Price Struggles between $3,180 Support and $3,440 Resistance

The gold chart below shows a well-defined consolidation pattern, with the price fluctuating between $3,180 and $3,440 since early April. This range followed a strong rally in March and reflects market indecision. Several attempts to break above the $3,440 resistance have failed, showing that sellers remain active at higher levels.

(Click on image to enlarge)

Currently, gold is trading near $3,328, close to the midpoint of its range. If bulls manage to push price above the $3,440 ceiling, a breakout could trigger a sharp move toward the next target at $3,500. This level, clearly marked on the chart, stands as the next significant resistance for gold in the short term.

On the lower side, the $3,180 level continues to act as a key support. A break below this zone could open the door for a deeper correction toward $3,050, which serves as significant support. Candlestick patterns indicate renewed buying interest after a recent pullback. Still, the sideways structure suggests that traders are waiting for a decisive trigger, most likely from upcoming US economic data, to drive the next move.
 

Conclusion

Gold remains a strong safe-haven asset. Traders are closely watching economic data and Fed signals for the next move. Fiscal concerns, trade tensions, and a weaker dollar are all contributing to the increased appeal of gold. Price action remains confined within a clear range, but a breakout may soon follow. Until then, market sentiment and key US reports will guide the metal’s direction. 

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