Gold Retreats from $3,345 Peak as Dollar Firms, but Fiscal Risks Keep Bullish Case Intact

Economic

Summary:

Gold prices retreated from a two-week high near $3,345 to trade around $3,300 on Thursday, weighed down by a rebound in the U.S. Dollar.

SELL XAUUSD

Close Time

CLOSED

3305.00

Entry Price

3100.00

3350.00

4189.28 -8.63 -0.21%

450.0

Pips

Loss

3100.00

3350.00

Exit Price

3305.00

Entry Price

3350.00

Gold prices edged lower on Thursday during European trade, surrendering early-session gains after touching a two-week high around $3,345. At the time of writing, spot gold (XAU/USD) was seen hovering near the $3,300 mark, pressured by a modest recovery in the U.S. Dollar. While the metal lost ground intraday, its broader outlook remains notably firm, underpinned by renewed U.S. fiscal concerns and escalating geopolitical tension surrounding the ongoing war in Ukraine.

The U.S. Dollar Index, which gauges the greenback against a basket of six major currencies, climbed about 0.15% to trade near 99.85 after bottoming at 99.35 earlier in the week. A firmer dollar tends to exert downward pressure on gold, making it more expensive for foreign buyers. Yet this renewed strength in the dollar appears more of a technical rebound than a reversal in the fundamental narrative that continues to favor gold in the medium term.

Driving the metal’s underlying support is the intensifying spotlight on U.S. fiscal instability. On Wednesday, the House Rules Committee, under Republican control, advanced President Donald Trump’s sweeping tax package for a full vote in the House. The bill is projected by the Congressional Budget Office to increase the federal deficit by $3.8 trillion over the next ten years. It includes extensions of Trump-era tax cuts and adds new breaks on tips, overtime pay, and car loan interest. At a time when the U.S. national debt is already exceeding $36 trillion, market participants are increasingly concerned that such measures may further strain the country’s long-term creditworthiness.

That anxiety was validated by Moody’s, which downgraded the U.S. sovereign credit rating from Aaa to Aa1 last week. In its statement, the ratings agency cited ongoing legislative dysfunction and a failure by both Congress and successive administrations to implement meaningful deficit reduction strategies. As investors digest the implications of spiraling debt and widening deficits, many are reallocating toward traditional safe-haven assets like gold.

Adding to the bullish undertone is the gloomy domestic macroeconomic narrative. Fears of stagflation—where inflation persists alongside stagnating growth—are mounting among both investors and policymakers. JPMorgan Chase CEO Jamie Dimon added his voice to the chorus this week, expressing support for the Federal Reserve’s decision to hold interest rates steady while cautioning that the U.S. economy remains far from stable. In an interview with Bloomberg, Dimon said he does not believe the current environment is a “sweet spot,” highlighting risks posed by inflation, geopolitical shocks, and the rising cost of capital. These factors, combined with a fragile labor market, suggest the Fed may remain in a holding pattern, which could cap gains in the dollar while supporting non-yielding assets like gold.

Geopolitically, tensions are again flaring over the war in Ukraine. According to reports from the Wall Street Journal, President Trump told European leaders in a private call that Russian President Vladimir Putin sees no incentive to agree to a ceasefire, believing he is winning the war. This latest stance contradicts Trump’s own public messaging earlier this week on Truth Social, where he claimed that both sides had agreed to initiate truce talks in the Vatican. The mixed messaging has only added to investor uncertainty, which has historically buoyed gold demand in times of global unease.

Technical Analysis

While the macro and geopolitical backdrop remains broadly supportive, gold’s immediate technical setup paints a more cautious picture. On the four-hour chart, gold continues to trade within a descending channel that has been in place for several sessions. The price is currently near the upper boundary of this channel around $3,355, which is acting as a resistance level. If this level holds and sellers step back in, the metal could reverse lower, with a potential move toward $3,200 or even $3,100 if the lower boundary of the channel is respected.

TRADE RECOMMENDATION

SELL GOLD

ENTRY PRICE: 3305

STOP LOSS: 3350

TAKE PROFIT: 3100

Risk Warnings and Disclaimers

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Eva Chen

Economic

Forex

Summary:

The EURNZD pair has recently been consolidating above 1.9107, with the market focusing on the potential interest rate cuts by the European Central Bank (ECB) and the ongoing economic weakness in New Zealand. In the short term, EURNZD is expected to maintain an overall upward bias within a range. If it breaks through key resistance levels, it could continue to rise.

BUY EURNZD

Close Time

CLOSED

1.91468

Entry Price

1.95500

1.89100

2.01492 -0.00059 -0.03%

236.8

Pips

Loss

1.89100

1.89094

Exit Price

1.91468

Entry Price

1.95500

Fundamentals

On the Euro front, as inflationary pressures gradually ease, the ECB has hinted at the possibility of initiating an interest rate cut cycle in June. However, overall monetary policy remains relatively cautious. Although economic growth remains sluggish, recent data show a slight recovery in service sector activity, which provides some short-term support for the Euro.

ECB Governing Council member Klaas Knot said on Tuesday that the possibility of an interest rate cut in June still exists, but it is far from certain.

He told reporters, "I cannot rule out that we will decide to cut rates again in June, but I also cannot confirm it." He emphasized that the ECB must continue to focus on medium- and long-term inflation risks rather than short-term fluctuations.

Knot noted that the new staff projections for next month will incorporate scenarios reflecting the impact of recent U.S. trade policies and potential countermeasures by the EU.

While the outlook may show a decline in inflation rates in 2025 and 2026, the greater concern is the long-term impact of tariff-related distortions beyond that period. "What is more interesting is to observe what happens after that period," he pointed out.

In New Zealand, inflation remains above the central bank's target, but the slowdown in core inflation has intensified market expectations for policy easing by the Reserve Bank of New Zealand (RBNZ). Moreover, the underwhelming economic recovery in China has weighed on New Zealand's exports, putting downward pressure on the New Zealand dollar. Additionally, fluctuations in commodity prices have added uncertainty to the NZD's trajectory.

Overall, while the Euro faces potential rate cuts, the New Zealand dollar's fundamentals are relatively weaker. As a result, EURNZD is in a favorable position.

Technical Analysis

From the daily chart perspective, EURNZD is currently in a bottom-building and upward trend, having formed a breakout pattern within the 1.8913-1.9107 range. The MACD indicator shows sustained positive momentum, with short-term moving averages in a bullish alignment, indicating a technical bias towards the upside.

If the price breaks through the resistance levels at 1.9265 and 1.9294, it could further open up upside potential and challenge the 50% Fibonacci retracement level of the 2.0011-1.809 range. Further gains could subsequently test the 61.8% and 78.6% Fibonacci retracements. Conversely, if the price falls below the support level at 1.8910, a short-term correction may ensue.

Trading Recommendations

Trading Direction: Long

Entry Price: 1.9107

Target Price: 1.9550

Stop Loss: 1.8910

Valid Until: June 6, 2025, 23:55:00

Support: 1.9107/1.9071/1.9007

Resistance: 1.9154/1.9268/1.9295

Risk Warnings and Disclaimers

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Alan

Commodity

Summary:

Market speculation suggests that OPEC may increase production again in July, potentially exacerbating the global crude oil supply surplus.

SELL WTI

Close Time

CLOSED

60.743

Entry Price

50.500

64.200

58.607 -1.202 -2.01%

238.9

Pips

Loss

50.500

63.132

Exit Price

60.743

Entry Price

64.200