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Gold faces intraday pressure as the US Dollar rebounds slightly from a multi-week low.
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Expectations of Fed rate cuts and concerns over U.S. fiscal stability could limit USD gains and support Gold.
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Heightened geopolitical risks and ongoing trade uncertainties may continue to bolster demand for XAU/USD.
Gold (XAU/USD) slips from its near four-week high early Tuesday, dipping to around $3,351 as the US Dollar (USD) recovers modestly. This mild rebound in the Greenback, coupled with a broadly positive risk sentiment, is pressuring the safe-haven metal during the European session.
However, the downside for gold remains limited. Persistent geopolitical tensions, ongoing US-China trade uncertainties, and concerns about America's worsening fiscal outlook continue to support safe-haven demand. Moreover, expectations that the Federal Reserve (Fed) will begin cutting rates in 2025 keep aggressive USD bulls at bay and help cushion gold’s losses.
Market Movers: USD Strength Caps Gold Price, but Risks Linger
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The USD bounced off a six-week low, prompting profit-taking in gold after Monday’s surge.
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Strong gains in Asian equities, tracking Wall Street’s rally, contributed to a risk-on mood and dented demand for bullion.
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Tensions between the US and China are escalating. Over the weekend, former President Donald Trump accused China of violating a recent tariff deal, while he proposed doubling steel tariffs from 25% to 50%. The administration is pushing for rapid trade negotiations before new tariffs take effect on July 8.
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Meanwhile, Russia-Ukraine peace talks in Istanbul ended without resolution. Ukrainian drone strikes and Russia’s retaliatory attacks continue to raise geopolitical risks, supporting safe-haven demand for gold.
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On the monetary front, the Fed is increasingly expected to cut rates next year despite potential short-term inflation from tariffs. Fed Governor Waller noted cuts remain on the table, while Chicago Fed President Goolsbee sees easing within 12–18 months. Dallas Fed’s Logan, however, urged caution.
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Market consensus leans toward at least two Fed rate cuts in 2025, while concerns over US fiscal stability could revive the “sell America” narrative, supporting non-yielding assets like gold.
- Looking ahead, traders await the US JOLTS job openings data and more comments from Fed officials. However, the spotlight remains on Friday’s Nonfarm Payrolls (NFP) report, which could significantly influence Fed rate expectations and gold’s trajectory.
Gold Price Outlook: Dip-Buying Interest Remains Strong
Technically, Monday’s breakout above the $3,324–3,326 resistance and further move past $3,355 was a bullish signal. Momentum indicators on hourly and daily charts remain supportive of an upward bias.
Immediate downside could find buyers around the $3,355 level, with stronger support at $3,326–$3,324. A break below could see prices test the $3,300 handle, and potentially $3,286–$3,285.
A move above $3,400 would be needed to signal a continuation of the bullish trend. Next upside targets lie at $3,430–$3,432, followed by the all-time high and a potential attempt at the $3,500 psychological level.
Despite Tuesday's pullback, gold remains well-positioned amid geopolitical risks, dovish Fed expectations, and lingering USD weakness.
