During the trading hours in North America on Wednesday, the price of gold (XAU/USD) saw an increase, reaching a value near $3,310. This recovery follows a decline of over 1% the day before. Despite growing confidence among investors that a trade agreement will be reached between the United States (US) and the European Union (EU), the value of the precious metal continues to rise. In a post on Truth.Social, US President Donald Trump expressed his confidence that the EU is quickly making efforts to negotiate a trade deal with the US. Trump wrote, “I am pleased with the 50% Tariff allocation on the European Union, especially since they were moving slowly. I have been informed that the EU has reached out to establish meeting dates quickly. This is a positive development and I hope they follow through.”
This positive outlook is due to the improvement of the global economic situation, as both the US and EU are major players in the global market. This optimism has also had a positive impact on the US Dollar (USD). During trading hours in Europe, the US Dollar Index (DXY) initially rose, but later fell back to around 99.50 after reaching an intraday high of 99.85. However, this is still a significant improvement from the monthly low of 98.70 recorded on Monday. From a technical standpoint, a stronger US Dollar makes gold a more expensive investment for traders.
The price of gold has been struggling around an upward-sloping trendline near $3,335 on the daily timeframe, which was drawn from the high on December 12 ($2,726). Despite this, the short-term trend for the precious metal remains bullish as it remains above the 20-day Exponential Moving Average (EMA), currently at $3,288. The 14-day Relative Strength Index (RSI) remains between 40.00 and 60.00, indicating uncertainty among market participants.
Looking ahead, the key resistance level for gold will be the high of May 7 at $3,440, while the crucial support level will be at the low of May 15 at $3,120.