Gold Holds Firm as ECB Cuts Rates, U.S. Jobless Claims Rise, and Trade Tensions Deepen

Commodity

Traders' Opinions

Summary:

Gold remains buoyant above $3,370 as escalating trade tensions, rising U.S. jobless claims, and a surprise ECB rate cut fuel safe-haven demand.

BUY XAUUSD

Close Time

CLOSED

3364.73

Entry Price

3435.00

3320.00

4212.23 +14.32 +0.34%

447.3

Pips

Loss

3320.00

3319.93

Exit Price

3364.73

Entry Price

3435.00

Gold prices (XAU/USD) steadied near elevated levels on Thursday as a cocktail of central bank easing, labor market weakness in the United States, and renewed geopolitical friction buoyed investor appetite for safe-haven assets. With spot prices holding above $3,370 after testing $3,400 in early European trade, bullion continues to find firm footing amid deepening macroeconomic and geopolitical uncertainty.

The metal's latest gains are underpinned by a dovish pivot from the European Central Bank, which delivered a widely expected 25 basis-point interest rate cut—the first in nearly a year. Although the decision was priced in, market participants parsed ECB President Christine Lagarde’s cautious tone during the subsequent press conference. Lagarde flagged persistent financial stability risks in the euro area, acknowledging that while banks remain resilient, external threats—particularly trade-related—continue to cloud the outlook.

“The risk environment remains fragile,” Lagarde said. “This is a precautionary step aimed at ensuring that monetary conditions remain accommodative enough to support growth as inflation eases.”

The move comes just ahead of a pivotal meeting between German Chancellor Friedrich Merz and U.S. President Donald Trump in Washington. The two leaders are expected to hash out issues ranging from NATO funding to increasingly strained transatlantic trade ties. The diplomatic backdrop has shifted sharply in recent days as Washington doubled tariffs on European and Mexican steel and aluminum imports from 25% to 50%, prompting retaliatory warnings from global counterparts.

Mexican President Claudia Sheinbaum was particularly forceful in her remarks, calling the new U.S. tariffs “unjust, unsustainable, and without legal grounds.” Canadian Prime Minister Justin Trudeau labeled the measures “illegal,” while EU officials have hinted that countermeasures could be imposed as soon as next week if talks fail to yield a resolution.

Across the Atlantic, signs of economic deceleration are becoming harder to ignore. U.S. Initial Jobless Claims rose to 245,000 in the latest weekly reading, exceeding economist expectations of 235,000 and stoking concerns that the labor market is beginning to lose momentum. This followed Wednesday’s weak ADP employment print, which showed private payrolls increasing by just 37,000 in May—well below the 150,000 expected.

All eyes are now on Friday’s closely watched Nonfarm Payrolls (NFP) report. Consensus forecasts suggest 130,000 jobs were added last month, down sharply from April’s 177,000 figure. While the unemployment rate is expected to remain unchanged at 4.2%, a surprise miss could reinforce market speculation that the Federal Reserve may opt for a rate cut as early as July, rather than waiting until September.

Such a shift would be particularly supportive for gold, which tends to benefit when interest rates fall and the opportunity cost of holding non-yielding assets declines.

“Gold is one of the few assets catching a safe-haven bid in a world where central banks are blinking,” said AvaTrade market strategist Naeem Aslam. “With the ECB cutting and the Fed under pressure from rising jobless claims and slower hiring, the path of least resistance for gold remains higher.”

Technical Analysis

Technically, gold remains on solid footing. The yellow metal continues to trade within a short-term bullish channel and recently confirmed a breakout above the key resistance level of $3,365. Momentum indicators, such as the Relative Strength Index (RSI), are flashing bullish signals, while the 50-day exponential moving average (EMA50) provides dynamic support to price action.

As long as gold sustains above $3,365, traders are likely to target the next key resistance level at $3,435. A decisive break above this level could pave the way for a fresh leg higher, particularly if Friday’s U.S. employment data disappoints and further dampens the Fed’s tightening stance.

For now, the short-term trading range is seen between support at $3,330 and resistance at $3,435. The outlook remains bullish, with any dips likely to attract fresh buying interest amid persistent global uncertainties.

TRADE RECOMMENDATION

BUY GOLD

ENTRY PRICE: 3365

STOP LOSS: 3320

TAKE PROFIT: 3435

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

Sterling surged to its highest level in over two years, breaking above 1.3600 against the dollar as weak US jobless claims data and hawkish signals from the ECB drove broad-based dollar selling.

BUY GBPUSD

Close Time

CLOSED

1.36002

Entry Price

1.39500

1.35400

1.33195 -0.00117 -0.09%

60.2

Pips

Loss

1.35400

1.35398

Exit Price

1.36002

Entry Price

1.39500

The British pound extended its bullish streak on Thursday, breaching the key 1.3600 mark against the US dollar for the first time since February 2022. The rally in GBP/USD gathered pace during the American session as mounting selling pressure on the greenback, triggered by softer-than-expected US economic data, sent investors scrambling for alternative majors. At the time of publication, the pair was trading at 1.3605, up 0.4% on the day, after rising steadily throughout the session.

The key driver behind the pound’s ascent was the latest data from the US Department of Labor, which showed an unexpected increase in initial jobless claims. First-time applications for unemployment benefits rose to 247,000 for the week ending May 31, missing the market consensus of 235,000 and adding to evidence that the labor market may be losing momentum. This print reinforces concerns that the US economy, while still growing, is beginning to cool, particularly in the employment sector.

This shift in sentiment came just hours after the European Central Bank delivered a 25-basis-point rate cut but offset the dovish action with assertive forward guidance. ECB President Christine Lagarde struck a notably hawkish tone in her post-decision remarks, suggesting that the central bank may now be close to ending its easing cycle. She noted that the ECB was in “a good place” and emphasized data-dependence going forward. Her comments sparked a rotation out of the dollar as traders interpreted the ECB’s stance as less dovish than previously anticipated, thereby narrowing interest rate differentials between the eurozone and the United States.

Consequently, the US dollar came under renewed pressure across the board, with the dollar index (DXY) retreating to 98.45, down 0.4% on the day and near a multi-week low. With the dollar losing traction and global investors recalibrating expectations for the Federal Reserve’s next move, sterling emerged as one of the primary beneficiaries.

Market focus now shifts to a barrage of scheduled speeches from Federal Reserve officials due later Thursday, followed by the US nonfarm payrolls report on Friday. Traders will be watching closely to gauge whether Fed policymakers acknowledge the weakening jobs data as reason enough to justify rate cuts in the coming months. According to the CME FedWatch Tool, markets are currently pricing in a 30% probability of a 25-basis-point rate cut as soon as July. Any dovish tilt in Thursday’s commentary or a downside surprise in Friday’s labor report could intensify rate cut expectations and further undermine the dollar.

Technical Analysis

From a technical standpoint, GBP/USD is forming a classic ascending triangle formation on the four-hour chart, often regarded as a bullish continuation pattern. The pair has been consolidating beneath a horizontal resistance zone between 1.36200 and 1.36300, while maintaining higher lows along an upward-sloping trendline. This pattern signals mounting pressure on the resistance zone, with an eventual breakout appearing increasingly likely.

The distance between the base and the top of the triangle measures roughly 325 pips, calculated from the support level around 1.33000 to the resistance zone at 1.36250. A clean breakout above the 1.36300 region would project a target near the 1.39500 area, marking a potential continuation of the bullish trend and offering a compelling upside objective for momentum-driven traders. This level also coincides with a major technical barrier from early 2022, adding to its significance.

Adding further support to the bullish outlook, GBP/USD remains comfortably above its 50-period exponential moving average, which is acting as dynamic support. The Relative Strength Index (RSI) is trending positively, suggesting there is still room for the rally to extend before the pair reaches overbought conditions.

TRADE RECOMMENDATION

BUY GBPUSD

ENTRY PRICE: 1.3600

STOP LOSS: 1.3540

TAKE PROFIT: 1.3950

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The Australian Dollar has rebounded to weekly highs past 0.6500, buoyed by a weakening U.S. Dollar and rising global trade tensions, despite soft domestic GDP data and a dovish Reserve Bank of Australia.

BUY AUDUSD

Close Time

CLOSED

0.65349

Entry Price

0.69000

0.64500

0.66360 -0.00023 -0.03%

31.5

Pips

Loss

0.64500

0.65034

Exit Price

0.65349

Entry Price

0.69000

The Australian Dollar extended its rally for a second consecutive session on Thursday, breaking decisively above the 0.6500 level and marking a strong recovery from earlier losses this week. This move higher is largely being powered by a combination of U.S. Dollar weakness and growing market anxiety over trade policy under the looming specter of renewed tariffs. Investors appear increasingly willing to look past weaker-than-expected domestic growth data from Australia and the dovish messaging from the Reserve Bank of Australia, instead focusing on deteriorating sentiment around the U.S. economy.

Much of the recent momentum in the Aussie stems not from strength at home, but from the growing cracks in the U.S. economic outlook. On Wednesday, the Institute for Supply Management’s Services PMI revealed a surprise contraction, falling below the crucial 50-mark that indicates whether activity is expanding or shrinking. This was compounded by a weaker-than-anticipated reading from the ADP private payrolls report, which showed that hiring in the private sector slowed last month. These disappointing numbers have cast a shadow over Friday’s upcoming Non-Farm Payrolls report and reignited speculation that the U.S. economy may be inching toward a recession.

At the same time, trade tensions have surged back to the forefront. Former President Donald Trump, who remains an influential figure on economic policy expectations, declared that ongoing negotiations with Chinese Premier Xi Jinping have been "extremely hard," citing a lack of meaningful progress. Markets reacted nervously to the announcement that tariffs on steel and aluminum imports would double to 50% from 25%, stoking fears of a broader protectionist pivot. Ironically, this uncertainty is hurting the U.S. Dollar more than traditionally risk-sensitive currencies like the Aussie, which is defying its usual behavior under such conditions.

Despite a weak set of domestic data released earlier in the week, the Australian Dollar has held its ground. Australia’s first-quarter GDP rose just 0.2%, missing consensus forecasts of 0.4% and marking a notable slowdown from the 0.6% pace seen in the previous quarter. The disappointing growth figures suggest that the Australian economy is struggling under the weight of soft household spending, stagnant wage growth, and slowing business investment. Ordinarily, such data might have weighed more heavily on the currency, but current global dynamics appear to be overriding local fundamentals.

The dovish tone from the Reserve Bank of Australia adds another layer of complexity. Minutes from the central bank’s most recent policy meeting revealed that a 50 basis point rate cut was actively considered. Policymakers also signaled their readiness to implement further reductions if global trade conditions deteriorate due to escalating tariffs. While such a stance might normally pressure the Australian Dollar, the broader flight from U.S. assets is providing a supportive backdrop.

Technical Analysis

On the technical front, the price action in AUD/USD is encouraging for bulls. The pair has broken above a key resistance zone around 0.6550, signaling the potential for a broader breakout. The Relative Strength Index is showing bullish momentum, even as it edges into overbought territory, suggesting that strong buying interest remains in play. Additionally, the pair continues to trade above its 50-day Exponential Moving Average, which reinforces the view that the short-term trend remains upward. The Aussie is currently navigating a minor ascending channel that has kept price action relatively stable while guiding it higher.

We are now closely watching the next major resistance levels, with the first significant upside target emerging near the 0.6680 area, a zone that previously acted as a strong barrier. A sustained break above that could pave the way for an eventual test of the 0.6900 region, a level not seen since late last year. These milestones, however, are contingent on a continued softening of U.S. data and a lack of hawkish surprises from the Federal Reserve or other major central banks.

TRADE RECOMMENDATION

BUY AUDUSD

ENTRY PRICE: 0.6535

STOP LOSS: 0.6450

TAKE PROFIT: 0.6900

Risk Warnings and Disclaimers

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Eva Chen

Economic

Commodity

Summary:

The Institute for Supply Management (ISM) has indicated that the US service sector business activity has contracted for the first time in nearly a year. Meanwhile, according to the ADP National Employment Report, private sector hiring in the US saw a significant slowdown in May. The cooling US economy could lead to an early rate cut by the Federal Reserve, which is bullish for gold.

BUY XAUUSD

Close Time

CLOSED

3381.06

Entry Price

3500.00

3300.00

4212.23 +14.32 +0.34%

810.6

Pips

Loss

3300.00

3299.83

Exit Price

3381.06

Entry Price

3500.00

Fundamentals

Gold prices surged past $3,390 on Thursday as concerns over the US economic slowdown intensified, bolstering demand for non-yielding safe-haven assets and driving the strength in gold prices.

The ISM's report released on Wednesday revealed that the US service sector contracted for the first time in nearly a year, signaling a worrying sign of overall economic weakness.

Moreover, the ADP employment report showed a marked slowdown in private sector hiring, with only 37,000 jobs added in May, significantly below the expected 111,000 and also lower than the 60,000 added in April.

Nela Richardson, Chief Economist at ADP, acknowledged the hiring slowdown but noted that wage pressures have not yet significantly eased, indicating that while the overall momentum has weakened, certain parts of the labor market remain tight.

These weak indicators have reinforced expectations that the Federal Reserve will cut rates at least twice this year. This outlook is typically bullish for gold, as the precious metal becomes more attractive in a low-interest-rate environment.

Despite repeated calls for rate cuts by former President Trump, Federal Reserve officials have remained cautious, especially amid ongoing trade risks and a volatile global landscape.

Currently, attention is turning to the US non-farm payrolls report due out on Friday. If the report continues to fall short of market expectations, it could further clarify the Federal Reserve's policy path. (Bullish for gold)

Deteriorating US Economic Outlook Boosts Gold Prices Further_1

Technical Analysis

Since hitting a low on May 15, gold prices have been on a strong upward trend, forming a series of higher highs, signaling potential for further gains.

From a technical standpoint, gold prices are in an upward trend, having broken above this week's high of $3,392 during trading hours. The Relative Strength Index (RSI) indicates that buying pressure is dominant.

Given the clear daily upward trend, gold prices are expected to rise to the next resistance level at $3,415. Moreover, based on the continuation of the head-and-shoulders bottom pattern, a break above this level appears inevitable. The next resistance level is at $3,440.

Trading Recommendations

Trading Direction: Long

Entry Price: 3374

Target Price: 3500

Stop Loss: 3300

Valid Until: June 20, 2025, 23:55:00

Support: 3385/3361/3343

Resistance: 3415/3340/3480

Risk Warnings and Disclaimers

Add to Favorites

Eva Chen

Central Bank

Forex

Summary:

The Bank of Canada (BoC) has kept its key interest rate unchanged, primarily focusing on inflation risks. A potential rate cut in the future cannot be ruled out.

SELL USDCAD

Close Time

CLOSED

1.36582

Entry Price

1.34000

1.39100

1.38100 -0.00047 -0.03%

81.7

Pips

Loss

1.34000

1.37399

Exit Price

1.36582

Entry Price

1.39100