Gold Advances at $3,325.39 as Dollar Weakens and Global Tensions Flare

Gold prices surged over 1% on May 9, 2025, reaching $3,325.39 per ounce, as a weakening US Dollar and escalating geopolitical tensions drove demand for safe-haven assets. The US Dollar Index (DXY) fell 0.32% to 100.31, pressured by declining US Treasury yields, while looming US-China trade talks and heightened India-Pakistan conflicts fueled global risk aversion. President Donald Trump’s hint at an 80% tariff on China added uncertainty, as markets braced for pivotal negotiations. This report explores gold’s rally, the Dollar’s retreat, and the forces shaping this turbulent market landscape.

The US Dollar’s decline, after two days of gains, provided a tailwind for gold, with the DXY dropping to 100.31 amid falling US 10-year Treasury yields at 4.371% and steady real yields at 2.81%. This yield softness, combined with a risk-off mood, boosted non-yielding assets like gold, as Wall Street registered losses ahead of Saturday’s US-China trade talks in Switzerland. Investors remained cautious, tempering hopes for a trade war de-escalation between the two economic giants, especially after Trump’s social media post suggesting an 80% tariff on China, leaving markets on edge for the weekend’s outcomes.

Geopolitical tensions further underpinned gold’s appeal, with hostilities between India and Pakistan intensifying into a third day of drone and artillery exchanges. This escalation, alongside ongoing global conflicts like Russia-Ukraine and Israel-Hamas, reinforced gold’s safe-haven status. Central bank buying also supported prices, with China adding 2 tonnes to its reserves in April (totaling 2,294 tonnes), Poland increasing by 12 tonnes to 509 tonnes, and the Czech Republic adding 2.5 tonnes. The Federal Reserve’s recent rate hold at 4.25%-4.50%, amid inflation at 2.6% and a solid labor market (April’s 177,000 Nonfarm Payrolls), highlighted trade policy risks, with officials noting tariffs’ inflationary impact.

Gold’s technical outlook remains bullish, with the XAU/USD jumping above $3,300, driven by renewed buyer momentum as indicated by the Relative Strength Index (RSI). The next resistance at $3,350 looms, with a potential push toward $3,400 if momentum holds. A drop below $3,300, however, could see gold testing the May 1 low of $3,202. The Dow Jones fell slightly from its recent 41,113 peak, and the S&P 500 dipped from 5,617, reflecting market unease. As trade talks and geopolitical risks dominate, gold’s rally at $3,325.39 underscores its role as a haven in an uncertain global landscape.