Gold Price Soars Near $3,400 Amid Trade Tensions and Technical Breakout

NEW YORK, June 3, 2025 - Gold prices surged to a monthly high of $3,392 in early Asian trading on Tuesday before a slight pullback, fueled by escalating US-China trade tensions and a robust technical breakout. The XAU/USD pair remains supported by safe-haven demand as US President Donald Trump’s tariff policies intensify global trade concerns.

Investors are closely monitoring the upcoming US JOLTS Job Openings data, expected to show 8.1 million openings for April, which could influence the Federal Reserve’s policy stance and the US dollar’s trajectory. Despite a brief USD recovery, gold’s bullish outlook persists, with technical indicators pointing to potential record highs.

Trade Tensions Drive Safe-Haven Demand

Gold’s rally is propelled by renewed trade frictions following Trump’s announcement on Friday to double tariffs on steel and aluminum imports to 50%, aimed at bolstering the US steel industry. This move, coupled with accusations that China violated a tariff rollback agreement, has heightened fears of a deepening trade war. Gold, a traditional safe-haven asset, has benefited from these uncertainties, with prices climbing 2.3% this week alone.

Recent market data shows gold’s market cap nearing $650 billion, reflecting strong investor interest amid global economic volatility and a 29.5% year-on-year price increase to $3,304 per ounce as of May 30.

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Technical Breakout Signals Further Gains

The XAU/USD pair broke through a critical falling trendline resistance at $3,346 on Monday, closing at $3,382. Despite struggling to sustain above the 23.6% Fibonacci retracement level of $3,377, the 14-day Relative Strength Index (RSI) remains above 50, indicating persistent bullish momentum.

Analysts suggest a sustained move above $3,400 could target the May high of $3,439, with the potential to challenge the all-time high of $3,500. On the downside, support lies at the former trendline resistance, now at $3,341, with further declines possibly testing the 21-day Simple Moving Average (SMA) near $3,300.

Did You Know?
Gold’s safe-haven appeal has driven central banks to increase reserves, with global gold purchases reaching 1,037 tons in 2024, led by China and India, according to the World Gold Council.

US Economic Data and Fed Policy in Focus

The US dollar’s brief recovery on Tuesday, driven by traders covering short positions, has slightly capped gold’s upside. The upcoming JOLTS Job Openings data, due later today, could sway market sentiment. A strong reading above 8.1 million may bolster the Federal Reserve’s cautious approach to rate cuts, strengthening the USD and pressuring gold prices.

Conversely, a weaker-than-expected report could reinforce expectations of a dovish Fed, potentially pushing XAU/USD toward $3,500. The Trump administration’s looming trade deal deadline on Wednesday adds further volatility, with markets bracing for potential tariff escalations or negotiations.