Gold prices skyrocketed above $3,350 per ounce as renewed trade tensions between the United States and the European Union, combined with growing concerns over the U.S. fiscal outlook, drove investors toward safe-haven assets. President Donald Trump’s threat to impose 50% tariffs on EU imports and the passage of a massive debt-heavy bill in Congress fueled bullish sentiment for gold.
Gold Rallies as Trump Escalates Trade War with Europe
On Friday, gold (XAU/USD) jumped nearly 2% daily and about 5% weekly, trading at $3,359 after bouncing from a low of $3,287. The U.S. Dollar Index (DXY) dropped 0.66% to 99.24, providing further support for the dollar-denominated precious metal.
Trump stated that trade talks with the EU are “going nowhere” and warned that 50% tariffs on European imports could begin as early as June 1. Treasury Secretary Scott Bessent criticized EU proposals as being subpar compared to those of other key trading partners.
In addition, the House of Representatives passed Trump’s so-called “One Big Beautiful Bill,” a budget package that would raise the debt ceiling by nearly $4 trillion—sparking renewed fears about America’s growing fiscal deficit.
Falling Bond Yields and a Weaker Dollar Boost Bullion
U.S. Treasury yields declined, with the 10-year yield falling 3 basis points to 4.505% and real yields dropping by 2.4 basis points to 2.165%. These moves, alongside the weakening dollar, created a supportive environment for gold’s rally.
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While some geopolitical tensions eased—such as progress toward a ceasefire agreement in Ukraine and the conclusion of a fifth round of U.S.-Iran nuclear talks in Rome—investors remained cautious and risk-averse.
Looking ahead, the market will closely watch U.S. economic data releases including Durable Goods Orders, the second estimate of GDP, the minutes from the latest Fed meeting, and the Core PCE Price Index, which is the Fed’s preferred inflation gauge.
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