Gold Hovers Near Two-Week High
The gold ( XAU/USD ) price slightly fell by 0.46% on Monday, after The European Union has agreed to accelerate trade negotiations.
This decision follows US President Donald Trump’s threat to implement a 50% tariff on European imports, scheduled for 1 June. Now, the deadline has been postponed to 9 July to give both sides more time for dialogue. The EU’s proactive stance underscores the high stakes of preserving transatlantic trade relations amid mounting protectionist rhetoric. Markets reacted cautiously to the development, highlighting investor concerns about disruptions to global trade and corporate earnings.
"At this point, we are seeing some consolidation in gold prices. The market is taking a breather and waiting for the next catalyst", said Kelvin Wong, Senior Market Analyst, Asia Pacific at OANDA. "However, market participants are concerned about the widening of that US budget deficit that is a supporting factor for gold prices and that is also driving a dollar weakness as well".
XAU/USD remained relatively unchanged during Asian and early European trading sessions. Today, the main focus is on the US macroeconomic reports: Durable Goods Orders at 12:30 p.m. and CB Consumer Confidence at 2:00 p.m. UTC. Stronger-than-expected figures could delay further rate cuts, potentially weighing on XAU/USD. Conversely, worse-than-expected results may weaken the greenback and drive the gold price higher. Key levels to watch for XAU/USD are support at $3,320 and resistance at $3,370.
Euro—Next Global Reserve Currency?
The euro ( EUR/USD ) gained 0.2% as investors remained cautious amid growing concerns over the US’s comprehensive tax and spending bill and its impact on the nation’s fiscal outlook. The proposed legislation could significantly widen the federal deficit, fuelling scepticism about the long-term sustainability of US debt and dampening appetite for dollar-denominated assets.
This uncertainty has added to the broader erosion of confidence in US financial instruments as markets assess the risks of increased borrowing against a backdrop of already elevated debt levels. With investors reassessing the relative attractiveness of US assets, the US dollar ’s (USD) recovery remains limited. Global markets are increasingly sensitive to fiscal developments and their implications for monetary policy and interest rates.
"In a way, all roads have led to a weaker USD’, said Chris Weston, Head of Research at Pepperstone. "Higher perceived US deficits have raised concerns about increased future Treasury issuance, pushing up term premium and seeing people migrate away from the USD". Meanwhile, European Central Bank President Christine Lagarde said on Monday that the euro could become a viable alternative to the US dollar, the global reserve currency, if governments can strengthen the bloc’s financial and security architecture. "The ongoing changes create the opening for a ’global euro moment’, Lagarde said at a lecture in Berlin. ’The euro will not gain influence by default—it will have to earn it".
EUR/USD remained relatively unchanged during Asian and early European trading sessions. Today, two US macroeconomic reports will come out and may affect the market: Durable Goods Orders at 12:30 p.m. and CB Consumer Confidence at 2:00 p.m. UTC. Better-than-expected data could support the US dollar, pulling the euro lower. In contrast, lower numbers may support the bullish momentum in EUR/USD.
British Pound Reaches Highest Levels Since 2022
British Pound ( GBP/USD ) continues to make new highs and reached 1.35937 on Monday.
Market sentiment improved following US President Donald Trump’s decision to delay imposing 50% tariffs on EU goods until 9 July. The decision boosted global risk appetite and further supported the British pound. The pound was already in a bullish trend, bolstered by stronger-than-expected domestic data pointing to sustained consumer activity despite broader economic challenges.
U.K. retail sales climbed 1.2% in April, marking the fourth consecutive monthly gain and signalling continued consumer resilience in the face of tax increases and international trade uncertainty. However, elevated inflation remains a key concern, with the headline inflation holding firm at 3.5%, surpassing market forecasts. In response, interest rate expectations have shifted, with markets are now pricing in a 50% chance of a Bank of England (BoE) rate cut by August. Meanwhile, the likelihood of a second cut by year-end grows as policymakers navigate the balance between inflationary pressures and slowing growth momentum.
GBP/USD rose slightly during Asian and early European trading sessions. The pair will likely experience significant volatility today as Andrew Hauser, Executive Director of Markets at BoE, will give a speech at 11:00 a.m. UTC. He may provide clues on the future changes in U.K. monetary policy. In addition, the US will release two important macroeconomic reports: Durable Goods Orders at 12:30 p.m. and CB Consumer Confidence at 2:00 p.m. UTC. Both reports will impact the US dollar, but the labour market figures are the most important. If jobless claims exceed expectations, GBP/USD may move higher, possibly above 1.36000. Lower-than-expected results may extend the short-term downtrend in GBP/USD and push the pair below the critically important 1.35000 level.