Gold Soars Above $3,350 As Tariffs And Deficit Fears Roil Markets

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By Matthew Bolden – May 23rd, 2025 3:57:19 PM EDT

Happy Friday, traders. Welcome to our weekly market wrap, where we take a look back at these last five trading days with a focus on the market news, economic data, and headlines that had the most impact on gold prices and other key correlated assets— and may continue to in the future.

Here’s what you need to know:

Gold surged more than 5% this week, ending near $3350/oz, driven by political and fiscal instability in the US.
The House budget bill and Trump’s new 50% EU tariff threats rattled markets, weighing heavily on the US Dollar.
Safe-haven flows into gold accelerated after credit rating concerns and equity market turbulence.
Next week’s focus: further fallout from fiscal policy chaos and potential weekend volatility spillover.

Whether we talk about gold, specifically, or markets in general, there are two main veins of policy enacted by the United States and others that play a key part in the economic function of each state and/or the global financial system: monetary policy and fiscal policy. To oversimplify: Monetary is primarily controlled or enacted by central banks like the Fed and affects the supply of money and the availability of credit, often via manipulation of key interest rates. Fiscal policy is how governments do (or do not) spend that cash or credit, injecting it into the national/global economy.

Both inputs were critical at home and abroad during the COVID-19 pandemic. But since economies began to rebound from that crisis and had to fend off the next one threatened by inflation, it’s been the pulling of monetary levers that investors and traders in gold and other assets have most focused on. In gold, dovish monetary policy (loosening of financial conditions, lowering interest rates) typically drives a rising tide; hawkish monetary policy (the inverse) typically drives spot prices towards the trough. Early 2025 and the escalation of the Trump Trade war, however, has pushed fiscal policy back into play because of the probability that crippling damage to US trade relations has the potential to leave ugly marks on the US federal budget (the keystone of fiscal policy) and balances.

So, What Kind of a Week Has it Been?

This week, the macroeconomic data calendar was very light, but several key Fed officials were scheduled to make public remarks just days after a major rating agency downgraded the credit-worthiness of US debt (a finding that has serious possible implications for both monetary and fiscal policy-making), so we had anticipated more trading based on reading the monetary-policy tea leaves.

Instead, the US’ majority-conservative legislature and the Trump administration delivered two ugly blows to US fiscal stability. Through Tuesday and Wednesday, an updated version of the US House’s omnibus budget bill was circulated ahead of votes, and the headline of most objective assessments of the spending package is that it would, if passed, blow a wide hole in the US’ already staggering national deficit. These reads and the reporting drove a risk-off jitter into markets at the same time as it pressured the US Dollar lower, reducing its appearance as a safe haven. Gold prices appreciated as a result, and spot prices climbed a total of roughly $110/oz over the two days’ trading and onto Wednesday’s sessions, high-ticking around $3338/oz.

Trump’s New EU Tariffs Roil Markets

Markets calmed by the end of Wednesday’s trading, and the yellow metal saw some of the early-week gains liquidated but largely appeared to be consolidating position just below or at $3300. With scheduled appearances from Fed officials and what scarce macro data there was for the week, which was mostly wrapped, we looked set to move into next week’s Memorial Day-shortened trading in roughly that position.

However, in the early hours of Friday trading, President Trump once again collapsed back onto the administration’s singular public-facing move of threatening to implode global trade and US commercial primacy, tacking a 50% tariff on all goods from the EU. Markets across the board have been roiled by this new threat, particularly with concern about American stability. Equity markets have tumbled, and the US Dollar is falling further, lending fuel to a second leg of this week’s gold rally. The yellow metal’s climb has been steady and consistent through Friday, and near to-market close, looks likely to move into the holiday weekend well above $3350/oz, a gain of more than +5% on the week.

What to Watch Next Week

Next week’s data calendar has a little more import to it, but we fully expect both the narrative around these new Trump Tariff threats and the likelihood of a de-constructive budget getting passed to be the dominant input to gold traders’ positioning through at least the end of May. Of course, there’s a greater-than-zero possibility either or both of these stories really ignite over the weekend, in which case Monday evening into Tuesday morning trading will bear the volatility of markets reopening.

In the meantime, traders, I hope you can get out and safely enjoy your weekend for the next couple of days. After that, I’ll see you back here next week for another market recap.

Matthew Bolden

Matthew Bolden is an active trader and investor. His passions include writing about financial markets in a simple, pragmatic way. His work has been seen in various arenas within the world of global finance, and he has written commentary on several markets including precious metals, stocks, currencies and options.

Matthew is an avid reader, student of the markets and sports enthusiast who resides in the greater Chicago area.

Courtsey To : Goldprice