Gold Surges to $3,382 as Trump Tariffs and Yield Crash Fuel Bullish Breakout
With XAU/USD nearing $3,400 and economic cracks deepening, could weak NFP data trigger a spike to $3,500—or is a reversal on deck? | That's TradingNEWS
XAU/USD Climbs to $3,382 as Bond Yields Dive and Dovish Bets Rise
Gold prices are charging toward the $3,400 mark as XAU/USD trades at $3,382, recovering sharply from a $3,343 low. This bounce is no coincidence—it reflects a storm of weak U.S. macroeconomic data, collapsing Treasury yields, and rising political risk. The ADP private employment print missed heavily at 37,000 versus expectations of 110,000, and ISM Services PMI collapsed to 49.9, marking the first contraction in nearly a year. These numbers triggered a steep drop in Treasury yields, with the 10-year falling to 4.383% and real yields diving to 2.063%, creating a favorable environment for gold, which offers no yield.
Trump’s Tariff Blitz and Trade Hostility Push Gold Demand Higher
The geopolitical landscape has shifted dramatically after President Trump signed off on a tariff hike that doubles levies on steel and aluminum from 25% to 50%, effective June 4. This announcement preceded a planned phone call with China’s President Xi Jinping, but optimism is vanishing fast. Trump’s social media statements calling Xi “extremely tough” to negotiate with have revived trade war fears that had been dormant for months. Investors are piling back into gold, not only as a response to softer macro data but also as insurance against another escalation in U.S.-China tensions.
U.S. Dollar Weakens Sharply; DXY Hits 98.81 as Rate Cuts Get Priced In
The U.S. Dollar Index dropped 0.44% to 98.81, a fresh monthly low, reinforcing gold’s bullish bias. With money markets now pricing in 54 bps of rate cuts by year-end and the July cut odds rising to 30%, the greenback has lost support. Fed officials are signaling patience, but market participants are unconvinced after the sharp miss in employment data. As real and nominal yields collapse, the opportunity cost of holding gold fades, pushing institutional flows into XAU/USD.
Technical Landscape: Bulls Push Against $3,400 But Momentum Stalls Below Key Resistance
From a price action lens, gold has cleared a key barrier at $3,324–$3,326, flipping that zone into strong support. Still, the metal is hesitating just below the $3,400 psychological line, failing multiple times to decisively take out the $3,392 high set earlier this week. If bulls can clear this hurdle, the path opens toward $3,438 (May 7 high), and then to $3,450, with the ultimate target being the all-time high of $3,500. Momentum is supportive—14-day RSI is near 60, and the 20-day EMA is rising around $3,317—but follow-through buying is critical. On the downside, a drop below $3,355 could test the breakout level at $3,326, with deeper support near the 50-day SMA at $3,235 and $3,167.
Fed Under Pressure as Trump Blames Powell While Fiscal Concerns Intensify
Trump’s criticism of Fed Chair Jerome Powell has added fuel to the market’s dovish expectations. The White House is not only pressuring the Fed to act but also escalating spending through new tax and budget proposals. That increases concern over U.S. fiscal stability and feeds into gold’s appeal as a hedge against policy mismanagement. Traders now await Friday’s Nonfarm Payrolls report, with the bar for a downside surprise already set by this week’s ADP and ISM data.
Safe-Haven Demand Amplified by Global Flashpoints: China, Russia, Gaza
Tensions aren’t limited to trade. Trump’s remarks about a conversation with Putin, where the Russian leader threatened retaliation over a Ukrainian strike, stirred global unease. Meanwhile, Gaza saw nearly 100 fatalities in a 24-hour period as Israeli strikes intensified following a U.S. veto at the UN. All of this is playing into the geopolitical risk premium embedded in gold prices. Traders aren’t just reacting to data—they’re bracing for shocks.
XAU/USD Verdict: Bullish Bias Firm Above $3,326 But Needs Breakout to Confirm Next Leg
With a weak dollar, falling yields, rising rate cut odds, and geopolitical friction flaring, the case for gold remains bullish. But the lack of a decisive break above $3,400 is a caution flag. If Friday’s NFP print disappoints, bulls are likely to take the reins and drive XAU/USD toward $3,438 and then $3,500. However, if data surprises to the upside, momentum could fade and the metal may revisit support near $3,326 or lower.
Verdict: Hold with bullish bias. Entry ideal on confirmed breakout above $3,400. Targeting $3,438 and $3,500. Downside risk capped above $3,235 unless yields spike.
