Usman Salis
Gold prices jump nearly $47 as stock markets and the US dollar decline amid rising trade tensions between the US and China.
XAU Rallies Sharply in Monday Trading
Gold (XAU) prices registered impressive gains during midday U.S. trading on Monday, with the precious metal gaining significant upward momentum during the American trading session. After a brief pause in overnight trading, gold found strength as U.S. stock indexes and the dollar index both declined. June gold futures were up $46.84, trading at $3,345.40, while May silver prices edged up just $0.01 to $33.02.
The rally comes amid renewed concerns about global trade relationships, particularly between the United States and China, pushing investors toward safe-haven assets like gold.
US-China Trade Tensions Boost XAU Appeal
The deterioration in U.S.-China trade relations has significantly contributed to gold's recent surge. Over the weekend, Chinese Ministry of Commerce spokesperson He Yadong stated that the U.S. should revoke its unilateral tariffs on China if it wants to address trade issues between the two economic powerhouses. He also noted that the countries are currently not engaged in trade talks and emphasized that the U.S. needs to "show sincerity" to restart negotiations.
According to broker SP Angel, shipments from China to the U.S. have plummeted by 60% since April when the U.S. increased tariffs to 145%. Meanwhile, President Trump has indicated that additional tariffs on Chinese goods could be implemented within the next two to three weeks.
This escalating trade conflict has been exacerbated by a downbeat Texas manufacturing outlook survey that suggested U.S. tariffs and related global trade tensions are beginning to negatively impact American companies, contributing to Monday's selloff in U.S. stock indexes.
Gold (XAU) Technical Analysis Shows Strong Bullish Position
From a technical perspective, June gold futures bulls maintain a solid overall near-term technical advantage. Their next upside price objective is to achieve a close above the strong resistance at the contract high of $3,509.90. Conversely, bears are targeting a push below solid technical support at $3,200.00.
Initial resistance is observed at Friday's high of $3,384.10, followed by the psychological level of $3,400.00. First support is located at $3,300.00, then at last week's low of $3,270.80, and subsequently at $3,250.00. Market analyst Wyckoff assigns gold a strong Market Rating of 7.5, indicating bullish sentiment.
Silver Markets Trail Gold (XAU) Performance
Silver futures for May delivery are showing a more modest performance compared to gold, though bulls still maintain a firm overall near-term technical advantage. Prices continue to follow an uptrend on the daily bar chart.
Silver bulls are aiming for prices to close above solid technical resistance at $35.00, while bears target closing prices below solid support at $32.00. First resistance appears at last week's high of $33.69, followed by $34.00. Next support levels are the overnight low of $32.585 and then $32.00. Wyckoff's Market Rating for silver stands at 7.0.
External Market Factors Influencing Gold (XAU) Direction
The key outside markets on Monday showed the U.S. dollar index trading lower, which typically supports higher gold prices as the metal becomes less expensive for holders of other currencies. Meanwhile, Nymex crude oil futures prices were also lower, trading around $61.75 per barrel.
The yield on the benchmark 10-year U.S. Treasury note stands at 4.227%, reflecting ongoing concerns about economic growth and inflation that often correlate with increased interest in gold as a store of value.
As global uncertainties persist and trade relations remain strained, many investors continue to view gold as an attractive safe-haven asset, potentially supporting further price increases if current market conditions persist.
Usman Salis
