- Gold prices dip on Tuesday as expectations for a July Fed rate cut fade.
- Investor sentiment is pressured by growing concerns over the economic impact of Trump’s proposed tariffs.
- However, mild U.S. dollar weakness helps cap further losses for the XAU/USD pair.
Gold (XAU/USD) remains under pressure during the first half of the European session on Tuesday, though several conflicting factors are helping to limit deeper losses. Expectations that U.S. President Donald Trump's proposed tariffs will boost inflation and prompt the Federal Reserve (Fed) to maintain higher interest rates are weighing on the non-yielding precious metal.
Despite this, the U.S. Dollar (USD) is having difficulty attracting strong demand, as concerns mount over the country's deteriorating fiscal outlook. Additionally, worries about the broader economic consequences of Trump’s aggressive trade policies and rising geopolitical risks are keeping market participants cautious. These factors discourage aggressive bearish positions on Gold and provide some underlying support.
Daily Digest: Market Movers and Key Developments
- On Monday, Trump extended the deadline for implementing reciprocal tariffs to August 1 and issued letters outlining increased trade barriers on a wide range of Asian and African countries. He further warned that any nation aligning with BRICS or pursuing anti-U.S. policies would face an additional 10% tariff, with no exemptions.
- As a result, the Federal Reserve is widely expected to keep interest rates elevated to counter potential inflation driven by higher import costs, combined with a still-strong U.S. labor market. This boosted the USD to a nearly two-week high during Monday’s trade, which weighed on gold during the Asian session.
- However, lingering uncertainty surrounding the economic fallout from these tariffs and deepening U.S. fiscal worries have dampened USD bullish momentum. At the same time, heightened global risk aversion—evident in widespread equity market losses—continues to support gold’s safe-haven appeal and calls for caution among bearish traders.
- With no major U.S. economic data releases scheduled for Tuesday, market attention turns to the upcoming FOMC meeting minutes on Wednesday. Investors are looking for clues about the Fed’s rate-cut timeline, which will likely influence USD demand and offer fresh direction for gold prices.
Technical Outlook: Gold Faces Resistance at 100-SMA on H4 Chart
Gold’s overnight rebound was capped near the 100-period Simple Moving Average (SMA) on the four-hour chart, positioned around the $3,347–$3,348 zone. Beyond this level lies a stronger resistance at $3,358–$3,360. A decisive move above this supply zone could trigger short-covering and potentially push gold toward the $3,400 psychological level.
On the downside, the $3,300–$3,295 range continues to act as immediate support. A break below this area could accelerate selling, with the next notable support around $3,270. Continued bearish pressure might even drag XAU/USD further down toward the $3,248–$3,247 zone, marking the June swing low.
