Gold price (XAU/USD) trades firmly above $3,400 during the European trading session on Wednesday, the highest level seen in over five weeks. The precious metal strengthens as global trade tensions continue to persist even as the United States (US) has confirmed a trade agreement with Japan.
On Tuesday, US President Donald Trump announced through a post on Truth.Social that Washington has reached a deal with Tokyo in which the baseline tariff on imports from Japan will be 15%, lower than 25% imposed at the start of this month.
Escalating trade worries between the US and the European Union (EU) continue to keep the global trade outlook on a cliffhanger. Earlier this week, EU officials threatened to retaliate against US tariffs by proportionate countermeasures after a report from the Wall Street Journal (WSJ) stated that Trump is considering a higher baseline tariff rate in a range between %15% and 20% on imports from the trading bloc.
Theoretically, heightened global economic tensions bode well for safe-haven assets, such as the Gold price.
Meanwhile, the underperformance by the US Dollar has also strengthened the Gold price. Technically, lower US Dollar makes the Gold price an attractive bet for investors. The US Dollar trades lower even as the US-Japan trade deal has trimmed tariff uncertainty.
At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades weakly near the two-week low around 97.40 posted on Tuesday.
Gold technical analysis
Gold price is close to breaking the Symmetrical Triangle formation on the upside – a move that often leads to volatility expansion. The upward-sloping trendline of the above-mentioned chart pattern is placed from the May 15 low of $3,120.83, while its downward-sloping border is plotted from the April 22 high around $3,500
The 20-day Exponential Moving Average (EMA) around $3,358 acts as a key support area for the Gold price.
The 14-day Relative Strength Index (RSI) rises above 60.00. A fresh bullish momentum would emerge if the RSI holds above that level.
Looking up, the Gold price will enter uncharted territory if it breaks above the psychological level of $3,500 decisively. Potential resistances would be $3,550 and $3,600.
Alternatively, the Gold price would fall towards the round-level support of $3,200 and the May 15 low at $3,121, if it breaks below the May 29 low of $3,245
Source: Fxstreet
