Gold prices jumped dramatically on Friday, rising over 5% this week and nearly 2% in a single day.
The rise happened as the US dollar fell as a result of increasing financial problems and disputes between the US and the EU.
Negotiations with the bloc are “going nowhere,” according to President Trump, who threatened to impose 50% tariffs on EU goods starting from June 1.
Furthermore, Treasury Secretary Scott Bessent claims that the EU’s evaluations fall below those of the rest of its international trading partners.
Market and Fiscal Policy Risks Drive Gold Rally
As the US House passed Trump’s $4 trillion budget proposal, known as the “One Big Beautiful Bill,” investor anxiety increased.
The Senate will now consider the legislation. A weaker dollar and worries over the US’s mounting debt contributed to gold’s increased appeal.
Gold gained additional momentum as the US Dollar Index (DXY) dropped 0.66% to 99.24. Gold, which is valued in US dollars, usually gains from a declining dollar.
The overall outlook of the market was also impacted by US housing statistics. Development permits dropped 4% to 1.422 million units.
New residential sales rose 10.9% to 0.743 million, although there were mixed signals.
Notable Fed officials also spoke out. Musalem of the St. Louis Fed brought up supply chain issues and pricing.
XAU/USD Technical Prediction
With significant momentum moving in toward the target of $3,400, the technical trend for gold continues to be positive.
The RSI indicates potential for more advancements before excessive circumstances arise.
Significant stages of resistance include
- $3,400
- $3,438 (high on May 7)
- $3,450
- $3,500, the highest amount ever
- Gold might move toward $3,204 and perhaps test the 50-day moving average at $3,199 if prices fall below $3,300.
Why Is the Price of Gold Rising?
- Trump’s trading warnings against the EU prompted aversion to risk.
- An additional four trillion dollar borrowing bill raised concerns about the US budget.
- The decline of the US dollar increased the tempting value of gold.
- Bond interest rates played a significant role in the gold boom as well.
