- Gold prices are seeing an influx of safe-haven investments due to Trump’s new tariff threats.
- Increased expectations for a Federal Reserve rate cut in September are also likely to positively influence non-yielding assets.
- The USD has dipped to nearly two-week lows, further supporting XAU/USD.
The price of gold (XAU/USD) is expected to rise as demand for traditional safe-haven assets increases in light of new trade tensions early Thursday in Europe. Additionally, the growing belief that the US Federal Reserve might resume cutting interest rates in September is also contributing to this upward trend for non-yielding gold, making it more appealing.
Meanwhile, dovish expectations from the Fed are pushing the US dollar (USD) down to its lowest point in nearly two weeks, which, in turn, further supports gold prices. Even a generally upbeat equity market isn’t enough to dampen the bullish sentiment surrounding precious metals during the day. This indicates that the XAU/USD pair has an upward path with little resistance, though bulls might be waiting to see movement above the $3,400 level.
Daily Digest Market Movement: Gold Price Bulls poised to take control amidst trade tensions.
- On Wednesday, US President Donald Trump signed an executive order that imposed an additional 25% tariff on Indian imports as a response to their oil purchases from Russia, raising the total tariff to 50%. There are also indications that a 15% tariff on all Japanese imports could be on the horizon.
- Furthermore, Trump mentioned earlier this week that tariffs on semiconductors and drug imports will be announced next week. This news might raise concerns about potential economic repercussions from global trade wars, leading to an increase in gold prices as investors seek safe havens on Thursday.
- Traders are now factoring in more interest rate cuts this year than previously anticipated, spurred by a disappointing US non-farm payroll report last Friday and weak ISM services PMI data released Tuesday.
- Market participants indicated that the likelihood of the US central bank cutting borrowing costs at the upcoming monetary policy meeting in September sits above 90%, according to CME Group’s FedWatch tool. Additionally, the Fed might implement at least two 25 basis point cuts by the end of the year.
- The dovish forecasts from the Fed are not helping the USD make a meaningful recovery from a week’s low seen on Wednesday, which favors the appeal of gold. However, a positive sentiment around risk, driven by overnight gains on Wall Street, is bolstering precious metal profits.
- Traders are looking forward to the first US unemployment claims figures set to be released later in the North American session, alongside speeches from key FOMC members, which could influence demand for the US dollar and create short-term trading opportunities in the XAU/USD pair.
Gold Price Bulls may be waiting for a sustained movement above $3,400 before making new moves
Technically speaking, gold has had a difficult time pushing past the $3,380-$3,385 range recently. Oscillators on the daily chart should be closely monitored by XAU/USD bulls. However, rebounds from the 200-period Simple Moving Average (SMA) on the four-hour chart this week support the likelihood of further gains. If there’s a continuation past the $3,400 mark, it would affirm an optimistic outlook, potentially pushing gold to hurdles in the mid-$3,420-$3,422 range on its way toward the $3,434-$3,435 supply zone. A strong push beyond that could allow for a retest of the all-time high around the psychological $3,500 level achieved in April.
In the background, corrective pullbacks could still find support near the $3,350 region. This aligns closely with the 200-period SMA on the four-hour chart, and a decisive break below it could lead to technical sell-offs, dragging gold prices down to support levels at $3,315 and then $3,300. Acceptance below those figures could expose further drops to last week’s support at $3,268 or even lower monthly levels.
