Gold (XAU/USD) maintained a cautious downside bias through Tuesday’s Asian session, retreating slightly from a three-week high but without strong bearish momentum. A modest rebound in the US Dollar (USD) and a broadly positive risk environment triggered the intraday pullback. Yet, a mix of geopolitical tensions, trade uncertainties, and expectations of Federal Reserve interest rate cuts restrained aggressive selling and helped cap deeper losses.
Investors remain uneasy amid escalating US-China trade frictions and geopolitical flashpoints. Over the weekend, US President Donald Trump sharply criticized China for breaching a preliminary tariff agreement, stoking renewed fears of a prolonged trade war. Earlier, Trump announced plans to double steel tariffs from 25% to 50%, while the administration urged trading partners to submit their best offers by Wednesday to finalize deals before reciprocal tariffs begin on July 8.
In addition, geopolitical risks remain elevated following inconclusive peace talks between Ukrainian and Russian delegations in Istanbul. Ukrainian President Volodymyr Zelenskyy hailed recent drone strikes as a success and vowed continued attacks unless Russia halts its offensive, further unsettling markets and reinforcing gold’s safe-haven appeal.
The Federal Reserve’s policy outlook is also supporting gold. Market bets for at least two 25 basis point rate cuts in 2025 are limiting losses for the non-yielding metal. Fed officials have recently signaled openness to easing, with Governor Christopher Waller acknowledging possible rate cuts despite inflationary pressures from tariffs, and Chicago Fed President Austan Goolsbee projecting rate reductions over the next 12-18 months. Conversely, Dallas Fed President Lorie Logan urged caution, emphasizing the risk of entrenched inflation expectations.
Despite these mixed signals, the prevailing view is that the Fed will maintain an easing bias amid signs of easing inflation and growing fiscal concerns in the US, which may dampen dollar strength and benefit gold. Investors now await the US JOLTS Job Openings report for fresh market direction, with Friday’s Nonfarm Payrolls (NFP) release expected to remain the primary focus.
From a technical standpoint, gold’s recent breakout above $3,324-$3,326 and extension beyond $3,355 signals bullish momentum. Technical indicators on daily and hourly charts remain positive, suggesting upside potential. A dip below $3,355 could attract buyers, with support near $3,324-$3,326. However, a sustained fall under $3,300 could expose gold to further losses toward $3,286-$3,285.
On the upside, bulls will look for a breakthrough above the $3,400 mark to target resistance around $3,430-$3,432. A sustained move beyond this level could pave the way for gold to challenge its April all-time high and the key psychological $3,500 barrier.
