Gold Prices and Market Trends
- Gold prices may attract buyers amid ongoing trade uncertainty.
- Traders are concentrating on this week’s trade talks between the US and EU.
- US Treasury Secretary Bescent cautioned that the Fed’s independence in monetary policy is at risk.
On Tuesday, gold prices (XAU/USD) are expected to dip after two days of gains. Still, the value of these safe-haven metals might be appealing due to uncertainty ahead of President Trump’s August 1 tariff deadline. Concerns regarding the Federal Reserve’s independence are also causing a stir in the market.
Traders are keenly observing the trade negotiations between the US and the European Union this week, hoping to finalize a deal before Trump’s deadline, when he has threatened a 30% tariff on the bloc’s exports. Meanwhile, EU diplomats have noted that the EU is exploring broader measures against the US as the chances of a satisfactory trade agreement seem to dwindle.
US Treasury Secretary Scott Bescent has remarked that the independence of the Fed’s monetary policy is threatened by an expanding mandate that encroaches on non-political areas. He has called for a thorough review of these activities and suggested reassessing the Fed’s role as an agency. Recent criticisms of Fed Chairman Jerome Powell, linked to Trump’s discontent over interest rates, have ignited speculation about potential upheaval.
The European Central Bank (ECB) is anticipated to maintain stabilized interest rates on Thursday after several cuts. Attention will then pivot toward the Federal Reserve’s policy decisions next week.
Market Update: Gold Prices Decline Amidst Market Movements
- The US Dollar Index (DXY), which gauges the value of the dollar against six major currencies, is holding steady after losing over 0.50% in the prior session, trading around 97.90. The greenback is finding support as market focus shifts to the dollar, impacting gold prices in foreign currencies.
- White House officials indicate a strong likelihood that President Trump might soon dismiss Speaker Jerome Powell, although Trump refuted these claims in a recent post, calling them “typically not true.”
- Republican Rep. Anna Paulina Luna has formally accused Federal Reserve Chairman Powell of perjury concerning long-planned renovations at the Fed headquarters.
- FOMC Governor Adriana Kugler argued that the central bank should refrain from lowering interest rates “for a while,” emphasizing that a tight monetary policy is crucial for controlling inflation psychology.
- San Francisco Fed President Mary Daly expressed last week that expecting two interest rate cuts this year is a “rational” perspective, but is also a caution against complacency, noting that rates will likely settle above 3% eventually.
- Governor Christopher Waller mentioned at a July meeting that the Fed might need to adjust interest rate targets due to rising economic risks, cautioning that delays could necessitate more aggressive measures later.
Gold Prices Retreat from $3,400 Despite Positive Outlook
Gold prices (XAU/USD) are trading around $3,390 per troy ounce this Tuesday. Recent technical analysis indicates that metal prices are forming within rising channel patterns, showing a general bullish trend. The 14-day relative strength index (RSI) is also above 50, which is an encouraging sign.
The XAU/USD recently approached significant resistance at $3,452, a three-month high reached on June 16. It hit an all-time record of $3,500 on April 22. If prices break above this level, they may test the upper limit of the rising channel.
On the downside, immediate support is seen at $3,358, based on the 9-day Exponential Moving Average (EMA). A decline below this threshold could weaken short-term momentum and test the lower boundary of the upward channel, aligning with the $3,316 50-day EMA.
