Gold Hits $3,382 as Yields Crash and Tariffs Rise—Will XAU/USD Smash Through $3,400?

XAU/USD Holds Near $3,382 as Traders Brace for Fed Signals, Geopolitical Risk and Soft Data Fuel Upside Momentum

Gold (XAU/USD) hovered at $3,382 in Thursday's European session, maintaining its grip on recent gains after rebounding sharply from a $3,343 low. A wave of soft U.S. economic data and collapsing Treasury yields have shifted capital back into the non-yielding metal. The 10-year U.S. yield fell 7.5 basis points to 4.383%, while real yields dropped to 2.063%, extending the bullish tailwind for bullion. Traders now watch for follow-through on Friday’s U.S. Nonfarm Payrolls print, which may determine whether XAU/USD clears $3,400 and retests the May 7 high at $3,438, or stalls again at the current ceiling.

Gold Price Reacts to Weak ADP, ISM Data as Fed Bets Shift Dovish Again

Wednesday’s economic prints painted a clear slowdown. ADP private payrolls came in at just 37,000, far below the 110,000 forecast and the revised 60,000 print from April. At the same time, ISM Services PMI dipped to 49.9, contracting for the first time in 11 months and missing the 52.0 consensus. These figures intensified expectations that the Federal Reserve will cut rates later this year. Money markets are now pricing in 54 basis points of cuts by year-end, and the CME FedWatch Tool shows July cut probability climbing to 30%, up from 22.5% just last week. XAU/USD immediately surged off its $3,343 lows in response, testing but failing to decisively clear the $3,392 weekly high.

Trump’s Metal Tariffs Escalate Trade Risk, Gold Benefits from Renewed Geopolitical Premium

U.S.–China tensions are once again influencing the gold complex. On Wednesday, President Trump signed an executive order raising tariffs on imported steel and aluminum from 25% to 50%, effective June 4. This comes days before a scheduled call with Chinese President Xi Jinping, but expectations of progress remain low. Trump has publicly declared that striking a deal with Xi is "extremely difficult," reigniting trade war fears. Meanwhile, the White House has faced multiple geopolitical flashpoints: from the U.S. vetoing a UN ceasefire resolution in Gaza, to heightened friction with Russia over Ukraine, where Trump revealed President Putin has threatened retaliation. Against this backdrop, Gold has reclaimed more than $55 since Tuesday, supported by safe-haven flows as global tensions escalate.

U.S. Dollar Drops as DXY Slides to 98.81, Weakening Greenback Gives XAU/USD More Room to Climb

The U.S. Dollar Index (DXY) fell 0.44% to 98.81, its lowest level in nearly a month. With Treasury yields falling and the Fed facing pressure to ease policy, the dollar has lost strength across the board. XAU/USD has a historical inverse correlation with the DXY, and this week's price action confirms that dynamic remains intact. Lower yields reduce opportunity cost for holding gold, and dollar softness makes gold cheaper for international buyers—especially relevant in the context of accelerating demand from Asian and Middle Eastern buyers.

XAU/USD Technicals Show Bullish Structure but Resistance at $3,400 Still Holding

From a chart perspective, gold remains in a strong bullish trend, but upside has stalled just below the psychological $3,400 mark. The price broke out above the $3,324–$3,326 level earlier this week, confirming a bullish continuation pattern, and is holding above an upward-sloping trendline drawn from the December 12 low of $2,726. The 20-day EMA, currently at $3,317, remains upward sloping, reinforcing the bullish bias. The 14-day RSI now sits near 60. A break above 60 would typically indicate strong momentum for a fresh bullish impulse.

Key resistance levels remain defined at $3,392, $3,438 (May 7 high), and the all-time high of $3,500. If XAU/USD breaks above the $3,400 barrier, a retest of the May peak looks likely. Further breakout may extend toward the ATH zone. On the downside, a fall below the $3,355 support could initiate a test of the $3,326 prior breakout zone. Breaching below that may drag prices toward the 50-day SMA at $3,235, and possibly the May 15 low at $3,121, if risk appetite suddenly rebounds.

Market Reluctant to Fully Commit Ahead of Friday’s NFP But Sentiment Tilts Bullish

Despite technical strength, traders are showing caution ahead of Friday's labor data. The NFP report is expected to show 130,000 jobs added, but traders are now bracing for another miss after the weak ADP and ISM results. Fed Chair Jerome Powell continues to face political pressure from Trump to accelerate cuts. This week, Trump publicly criticized Powell’s timing on easing, highlighting growing White House impatience.

Fed officials remain vague on timing, emphasizing data dependency. Still, the market is already leaning dovish. Should NFP miss expectations or the unemployment rate edge higher, XAU/USD could quickly reclaim the $3,400 handle and begin attacking the $3,438–$3,450 zone. Conversely, a hotter-than-expected NFP print could stall the rally, especially if bond yields react with a bounce.

Macro Backdrop Reinforces Bid Under Gold: Fiscal Risks, Policy Gridlock, Inflation Uncertainty

Beyond labor data, investors are focusing on growing U.S. fiscal imbalances. Trump’s tax and spending bill has intensified concerns around the U.S. budget deficit, with forecasts now projecting a faster-than-expected debt build-up. The threat of inflation returning in H2 due to tariffs or commodity spikes is another factor boosting demand for gold as an inflation hedge.

Global central banks continue to diversify away from the dollar, and demand from official institutions remains elevated. With rising trade conflict, a slowing U.S. economy, and fractured policy outlook, institutional portfolios are increasingly shifting back toward gold allocations. Central banks bought 1,037 tons of gold in 2024, and this pace is likely to continue or accelerate in 2025 if U.S. policy credibility deteriorates further.

Immediate Levels to Watch: $3,400 Breakout, $3,326 Retest, $3,235 SMA Cushion

The short-term structure favors the bulls, but confirmation is needed. If XAU/USD decisively breaks above $3,400, then price momentum could target $3,438 and then $3,500. Volume remains concentrated near the $3,355–$3,385 pocket, and sustained acceptance above that range will be critical for the next leg. Support remains thick around the $3,326–$3,324 range, and buyers are expected to step in aggressively if price dips below $3,355. A deeper correction would likely test the 50-day SMA at $3,235, with structural support at $3,167.

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