(Kitco News) -With U.S. markets closed for the Memorial Day long weekend, the gold market is seeing some quiet profit-taking while holding support above $3,300 an ounce.
Analysts say the metal is struggling as safe-haven demand fades. Gold saw strong gains Friday after President Donald Trump threatened to impose a 50% tariff on all EU imports starting June 1. However, in another administrative flip-flop during the weekend, Trump postponed the move to July 9 following a call with European Commission Chief Ursula von der Leyen.
While the immediate threat of a global trade war has eased, uncertainty continues to weigh on investor sentiment, which should keep supporting gold. Spot gold last traded at $3,338.70 an ounce, down 0.54% on the day.
“Even with Monday’s pullback, the broader technical and fundamental setup favors higher gold prices. Citi raised its 0–3 month target to $3,500/oz, citing ongoing geopolitical risk, tariff policy, and U.S. budget fears. UBS also maintains a bullish stance, expecting gold to retest the $3,500 mark,” said James Hyerczyk, Senior Market Analyst at FXEmpire.com, in a note. “With the market holding above $3,310 and safe-haven demand firm, traders should remain biased to the upside, watching for headline-driven entries.”
Although trade tensions have cooled slightly, currency analysts at Brown Brothers Harriman warn that Friday’s escalation—now targeting Europe—should not be ignored.
“We knew this was coming after Trump recently admitted that the US couldn't complete trade talks during the 90-day pause and would instead just start setting tariffs. How he arrived at 50% is anybody's guess, but this is just the start of what we expect to be much higher tariffs announcements,” the analysts said. “As we know from those initial announcements on April 9, there has been no serious analysis put into these tariffs and instead are simply meant to be a punitive measure on any country running a trade surplus with the US. We expect the EU will quickly retaliate. The US, EU, and China account for 60% of global GDP and so this escalation bodes ill for the entire world.”
In this environment, BBH remains bearish on the U.S. dollar. Their comments come as the dollar index hovers near 99.
“The dollar continues to experience a perfect storm of negative drivers: growing fiscal concerns, unpredictable tariff policies, and weaker U.S. data. Those drivers are likely to carry over into this week,” the analysts said.
Beyond trade, surging U.S. debt is also shaking confidence in the bond market. As the Treasury prepares to auction 2-, 5-, and 7-year bonds, analysts say weak demand—and any resulting spike in yields—could further boost gold.
Gold remains one of the few widely trusted safe-haven assets. And with rising yields possibly forcing the Federal Reserve to act—through yield curve control or rate cuts—analysts see continued upside for the metal.
