Daily Price Outlook
During the European trading session on Tuesday, Gold (XAU/USD) surged higher for a second consecutive day, supported by growing global geopolitical tensions, market volatility, and ongoing speculation regarding US trade deals and potential Federal Reserve interest rate cuts.
Gold's recent rise can largely be attributed to the escalating geopolitical concerns around the globe. In the Middle East, Israel is getting ready for a major ground offensive in Gaza, aiming to take full control of the region.
This uncertainty has fueled investors’ demand for safe-haven assets like Gold, which tends to benefit from geopolitical risk and instability.
US Trade Deal Hopes Boost Gold’s Safe-Haven Demand
On the US front, the growing expectations of a first trade deal have also contributed to the bullish sentiment in Gold.
US President Donald Trump and his administration have repeatedly hinted that an agreement is close, with US Commerce Secretary Howard Lutnick suggesting that the first deal will be with a top-ten economy.
While the deal is still in the works, the anticipation surrounding it has kept investors on edge, further fueling Gold’s safe-haven appeal.
Forex Market Volatility and Its Impact on Gold's Rise
Apart from this, the forex market volatility is another factor supporting Gold’s rise. On Monday, the Taiwan Dollar (TWD) experienced a sharp appreciation against the US Dollar (USD), sending waves across the foreign exchange markets.
Traders are now cautious, as the move could weaken the US Dollar against other major Asian currencies, reducing its role as a reliable safe haven. If the US Dollar weakens further, Gold stands to benefit as an alternative investment.
Fed Rate Cut Expectations Weigh on US Dollar, Benefiting Gold
Market participants are also keeping an eye on the Federal Reserve’s upcoming decisions on interest rates. According to the CME FedWatch tool, the probability of an interest rate cut by the Federal Reserve in May stands at just 2.4%, with the chances of no change in rates at 97.6%.
However, expectations for a rate cut in June have risen, with a 29.8% chance of a rate reduction. This speculation regarding a more dovish Fed stance has put downward pressure on the US Dollar, which in turn benefits Gold.
Shanghai Gold Exchange Expansion Boosts Yuan-Denominated Gold Products
In addition to this, the Shanghai Gold Exchange has plans to expand its warehouse network into Hong Kong, which could increase the global profile of its yuan-denominated gold products.
This move further solidifies the demand for Gold, as China continues to assert its influence in the global gold market.
GOLD (XAU/USD) – Technical Analysis
Gold has powered through key resistance at $3,350, breaking above the 50-period SMA ($3,273.07) and pushing into a tight descending triangle structure.
Price is now testing the upper boundary of this triangle, which has consistently held since the late-April rejection near $3,449.
The recent rally began after a firm higher low formation near $3,222, confirming bullish structure within a broader ascending channel.
Candlestick momentum is strong, with a near-vertical series of bullish candles—visually resembling a short-term "three white soldiers" pattern.
This signifies aggressive buyer interest. The RSI reading at 73.79 suggests overbought conditions, but no bearish divergence is present yet. Momentum remains intact, though traders should be cautious of potential exhaustion near the $3,408 resistance.
If the breakout clears $3,409 with conviction, the next targets become $3,449 and $3,499.80. A pullback toward $3,305 would still keep the structure intact if buyers defend that level.
Below that, $3,271 and $3,222 remain deeper support. The risk-reward favors the long side for now, with bullish bias maintained above $3,350.
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