Gold Price Hits Four-Week High Near $3,400 as US-China Trade Tensions Escalate

Gold Price Outlook: XAU/USD Surges to $3,400 on Safe-Haven Demand

XAU/USD Breaks Higher as Trade Fears Intensify

Gold price soared on Thursday, with XAU/USD reaching a four-week high near $3,400, driven by a spike in safe-haven demand amid growing uncertainty over the US-China trade relationship. US President Donald Trump's remarks labeling Chinese President Xi Jinping as "extremely hard to make a deal with" reignited market fears about a trade stalemate.

Trump on Truth Social: “President Xi… is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!”

These comments came just ahead of a planned round of bilateral trade discussions, rattling investor confidence and supporting gold as a hedge against geopolitical instability.

Treasury Yields Drop, Supporting Gold’s Rally

Adding fuel to gold’s rally is the sharp decline in US bond yields. The benchmark 10-year Treasury yield dropped to around 4.35%, its lowest level in four weeks, following disappointing US macroeconomic data:

• ADP Employment (May): 37K vs. expected 115K
• ISM Services PMI (May): 49.9 vs. 52.0 forecast

These figures point toward slowing economic momentum, strengthening the market’s belief that the Federal Reserve may cut interest rates as soon as July.

Why Gold Benefits from Lower Yields

Lower yields on interest-bearing assets reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors. This dynamic, coupled with rising recession fears and trade instability, creates a strong bullish backdrop for XAU/USD.

Key Levels to Watch

• Resistance: $3,400 (psychological), $3,415
• Support: $3,355, $3,330

With a breakout above $3,400, gold bulls may target a test of multi-year highs, especially if Friday's US Nonfarm Payrolls (NFP) report disappoints.

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