Gold Under Pressure After Strong U.S. Consumer Sentiment Data

Gold Drops After Upbeat U.S. Consumer Confidence Data

The gold (XAU/USD) price fell sharply by 1.24% on Tuesday after the better-than-expected U.S. consumer confidence data.

U.S. consumer confidence rebounded in May, rising sharply from near five-year lows, reflecting renewed optimism about the U.S. economy and labour market conditions. This surge suggests that U.S. consumers feel more secure in their financial outlook, potentially supporting continued consumer spending—a key driver of gross domestic product growth.

At the same time, U.S. President Donald Trump’s decision to postpone the imposition of tariffs on EU imports supported market sentiment. This move was seen as a constructive step towards de-escalating trade tensions and allowing additional negotiation time. Also, Minneapolis Federal Reserve President Neel Kashkari emphasised the need for a cautious monetary policy stance. He supported holding interest rates steady until the inflationary impact of existing tariffs becomes clearer.

During the Asian trading session, XAU/USD continued to decline. Today, gold will likely pause its decline after yesterday’s significant drop. Still, FOMC Meeting Minutes, due at 6:00 p.m. UTC, may add volatility to the market. Analysts anticipate a range-bound movement for the day, with XAU/USD potentially testing the support level at $3,285 before establishing its next direction. Key levels to watch for XAU/USD are support at $3,285 and resistance at $3,320.

Euro Extends Losses

The euro (EUR/USD) lost 0.52% on Wednesday, extending losses from the previous session.

U.S. consumer confidence data came out stronger than expected. Consumer confidence rebounded in May, signalling improved consumer sentiment about the U.S. economic outlook. The data reinforced investor appetite for US dollar-denominated assets, putting further downward pressure on the euro.

Market optimism following President Trump’s decision to delay the implementation of 50% tariffs on EU imports added to the euro’s weakness. This eased immediate concerns of a trade escalation, improving the investment outlook for U.S. assets. In anticipation of upcoming trade negotiations, European leaders have reportedly consulted with major firms to reassess their U.S. investment strategies. Meanwhile, Minneapolis Federal Reserve President Neel Kashkari reiterated his stance on holding interest rates steady until the inflationary impact of tariffs becomes clearer.

EUR/USD remained relatively unchanged during Asian and early European trading sessions. Market participants await the publication of the U.S. FOMC Meeting Minutes at 6:00 p.m. UTC today, which may shed light on the U.S. monetary policy in 2025 and influence the Forex market.

Australian Dollar Falls on Dovish RBA Stance

The Australian dollar (AUD/USD) declined towards around 0.64300 on Wednesday, extending its downtrend despite April’s Consumer Price Index (CPI) slightly exceeding expectations.

The CPI data revealed inflation was at 2.4%, marginally higher than the forecasted 2.3%. Still, the data failed to support the Australian dollar, as market participants remained focused on the Reserve Bank of Australia’s (RBA) dovish monetary stance.

The RBA’s recent 25-basis-point (bps) rate cut and signals of further easing amid global headwinds—particularly from ongoing U.S.-China trade tensions—have weighed on sentiment. Policymakers have also pointed to subdued inflation and growth risks as justification for фт additional stimulus. Markets now price in a 65% probability of another rate cut in July, with expectations for a cumulative 75 basis points of easing by early 2026. At the same time, the U.S. dollar (USD) continued to strengthen, buoyed by improving economic indicators, further reducing demand for the Aussie.

During Asian and early European trading sessions, AUD/USD maintained upward momentum. Today, traders should observe the upcoming FOMC Meeting Minutes at 6:00 p.m. UTC as they may offer insights into the Fed’s monetary policy outlook and affect the market. Key technical levels to watch are resistance at 0.64500 and support at 0.64000.