Market Insights > Daily Market Analysis

27 May 2025,04:05

Daily Market Analysis

Gold Inches Higher as US Fiscal Woes, Russia-Ukraine Escalation

27 May 2025, 04:05

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Key Takeaways:

*Safe-haven demand for gold rises as US debt concerns and intensifying Russia-Ukraine conflict rattle investor sentiment.

*The US dollar falls to a five-week low, with markets awaiting clarity on the government’s new spending bill.

*Geopolitical risk escalates as Ukraine reports record drone strikes and Western allies lift weapon range limits.

Market Summary:

Gold prices eased slightly on Monday, slipping below $3,340/oz after notching a two-week high of $3,360, as traders locked in profits following President Trump’s announcement to delay 50% of planned EU tariffs until July 9. The temporary de-escalation in trade tensions briefly lifted market sentiment, curbing safe-haven flows and encouraging position trimming, particularly in thin holiday trading conditions. Still, underlying demand for gold remains robust, driven by rising US fiscal concerns and intensifying geopolitical instability in Eastern Europe.

Markets remain acutely focused on the ongoing US budget debate, with the dollar hitting a five-week low as the Senate grapples with a new spending package that could deepen long-term fiscal imbalances. Investors continue to assess the implications of elevated debt levels and political gridlock in Washington, with growing expectations of further dollar weakness bolstering gold’s appeal.

On the geopolitical front, Ukraine reported its worst drone barrage since the war began, with Russian forces launching over 300 drones and dozens of missiles in coordinated strikes on civilian infrastructure in Kharkiv. Moscow accused Kyiv of retaliatory strikes on Russian territory, adding to fears of an extended conflict. Despite short-term selling, a sustained break above $3,360 could reignite bullish momentum, especially if upcoming US inflation data or a renewed surge in geopolitical risk catalyze another wave of safe-haven inflows.

Technical Analysis:

GOLD, H4

Gold is currently testing key resistance at $3355.00, after a sustained bullish rally. Momentum indicators suggest a potential near-term pullback. MACD is showing signs of a possible death cross, while RSI has retreated from overbought levels to 60, suggesting fading momentum.

A successful break above 3355.00 could expose the next resistance at $3440.00, while failure to break may trigger a short-term retracement toward support at $3240.00.

Resistance levels: 3355.00, 3440.00

Support levels: 3240.00, 3120.00

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