Gold price struggles to gain traction as persistent US Dollar strength and renewed trade optimism weigh on bullish momentum

Gold (XAU/USD) stalls its intraday rebound from a one-week low, trading near the $3,335 level during Monday’s early European session, marking its third consecutive day of losses. Persistent strength in the US Dollar (USD) continues to weigh on the precious metal, while an improved risk appetite—fueled by renewed trade optimism—further limits gold's safe-haven appeal.

Despite the Dollar’s resilience, USD bulls appear cautious, likely holding off on large positions ahead of key insights into the Federal Reserve’s (Fed) policy direction. Markets are focused on the outcome of the two-day FOMC meeting concluding Wednesday, which is expected to influence the USD’s trajectory and provide fresh direction for non-yielding assets like gold.

In addition to the Fed decision, upcoming US macroeconomic data releases throughout the week will be closely watched for further clues, potentially setting the tone for the next significant move in the XAU/USD pair.

Daily Digest Market Movers: Gold Struggles Amid Stronger USD and Waning Safe-Haven Demand

• Gold prices remain under pressure as the precious metal struggles to attract buyers, weighed down by a firmer US Dollar and declining demand for safe-haven assets. The cautious mood follows the announcement of a wide-ranging EU-US trade agreement, which imposes a 15% tariff on most European exports to the United States. This follows recent trade deals with Japan and ongoing US-China negotiations, fueling risk-on sentiment and dampening appetite for gold.
• The US Dollar starts the new week on a subdued note, as market participants await more clarity on the Federal Reserve’s monetary policy path. Attention is firmly fixed on the outcome of the two-day FOMC meeting, which kicks off Tuesday. While the Fed is widely expected to keep interest rates steady amid a strong labor market, concerns linger over the inflationary impact of tariffs in the months ahead.
• Adding to the uncertainty is the growing political pressure on the central bank. President Donald Trump has openly criticized Fed Chair Jerome Powell, raising fears about the institution’s independence. At the same time, Fed Governor Christopher Waller and Vice Chair for Supervision Michelle Bowman—both Trump appointees—have voiced support for a rate cut at the upcoming meeting, keeping USD bulls cautious.
• Wednesday’s Fed decision, along with the policy statement and Powell’s press conference, will be crucial for determining near-term USD direction and, by extension, gold's trajectory. In addition, key US economic releases throughout the week are expected to provide fresh impetus for the XAU/USD pair.

Gold Price Technical Outlook: Bears Maintain the Edge

From a technical standpoint, Friday’s decisive break below a short-term ascending trend channel and the 50% Fibonacci retracement of the recent rally from June’s swing low signaled a bearish shift in momentum. Daily chart oscillators are gaining downside traction, suggesting the path of least resistance remains tilted lower.

Despite this, gold has shown some resilience near the 61.8% Fibonacci retracement level, recovering modestly from the $3,312–$3,311 area in early Monday trading. A sustained break below this support zone would confirm further downside, potentially dragging XAU/USD below the $3,300 threshold and toward the monthly low in the $3,283–$3,282 region.

On the upside, any recovery is likely to face resistance near the 200-period Simple Moving Average (SMA) on the 4-hour chart, situated around $3,351–$3,352. A decisive break above this level could trigger short-covering and lift gold toward the $3,371–$3,373 supply zone. Continued momentum might pave the way for a move back toward the psychological $3,400 barrier, with further gains potentially extending to the $3,438–$3,440 static resistance area.