The price of gold (XAU/USD) has rebounded from its earlier low of $3,245 to reach $3,320 in Thursday’s North American trading session. This recovery is mainly due to the weakening of the US Dollar (USD) following a legal setback on US President Donald Trump’s tariff policy.
The US Dollar Index (DXY), which measures the strength of the Dollar against six major currencies, has also declined to around 99.50 as of writing. This decrease in the value of the Dollar makes gold a more attractive investment option for traders.
According to reports from the Associated Press, a federal court in New York has accused President Trump of violating the International Emergency Economic Powers Act (IEEPA) in his implementation of tariffs. The court has ordered the lifting of import duties within ten days, which the White House has promptly appealed.
In April, Trump announced tariffs on all trading partners and additional duties on Canada, Mexico, and China for their border policies and alleged involvement in the fentanyl trade. He justified these tariffs by declaring a national emergency under the IEEPA. This indicates that the tariffs on automobiles, steel, aluminum, and semiconductors are still in place.
The White House has expressed confidence in overturning the court’s decision. In an interview with Fox Business Network, White House Economic Adviser Kevin Hassett stated that they are “confident in the success of the tariff ruling appeal.”
Despite the recovery, gold continues to face resistance around the upward-sloping trendline on the daily chart, which is plotted from a high of $2,726 on December 12. However, the precious metal remains in a bullish trend as it hovers around the 20-day Exponential Moving Average (EMA) at $3,286.
The 14-day Relative Strength Index (RSI) is currently trading between 40.00-60.00, indicating indecisiveness among traders.
In terms of future outlook, $3,440 will serve as a key resistance level for gold, while the support level is at the recent low of $3,120.83 on May 15.