- Gold prices are expected to rise during Asian sessions, but sustained buying may not follow.
- Uncertainties in trade and increasing geopolitical tensions support the demand for safe-haven assets like gold.
- The Federal Reserve’s hawkish stance has pushed the USD to a weekly high, limiting gold’s gains against the dollar.
Gold prices (XAU/USD) saw some interest during the Asian session on Thursday, bouncing back slightly from prior losses to around $3,363-$3,362, which was noted as a weekly low. Concerns over global risk remain prominent due to ongoing trade disputes and rising geopolitical issues, particularly in the Middle East. This context is crucial in boosting demand for gold as a safe haven.
In the meantime, the Federal Reserve has decided to keep interest rates steady following a two-day meeting on Wednesday. This suggests a more cautious approach to future rate cuts, potentially due to worries that the tariffs imposed by President Trump could lead to higher consumer prices. The hawkish outlook has driven the US dollar’s value up, holding gold prices below $3,400 and challenging bullish positions.
Market Overview: Gold Prices Face Challenges in Attracting Buyers
- President Trump convened a meeting on Wednesday to discuss the ongoing Israeli-Iran conflict. Reports indicate he approved a plan for military action but is hesitant about engaging in a prolonged conflict.
- As the conflict enters its seventh day, the Israeli Defense Forces (IDF) have urged residents in certain Iranian cities to evacuate, raising fears of escalation and affecting investor sentiment.
- Earlier this week, Trump announced impending tariffs on pharmaceuticals, adding uncertainty ahead of the US tariff deadline and supporting gold prices, although there have been some dollar purchases offsetting this effect.
- The Federal Reserve’s decision to hold rates steady reflects concerns about how current tariffs could influence consumer prices. Predictions show a possibility of two rate cuts by the end of 2025, but only one minor reduction is expected for 2026 and 2027.
- Seven out of 19 policymakers expressed reluctance to cut rates further, concerned that inflation might remain elevated at around 3% by year’s end. This could bolster the dollar’s recovery from a three-year low, capping gains for gold.
- With US banks closed on Thursday for National Independence Day in June, market liquidity is expected to be low, and there’s no significant macroeconomic data coming out. As such, the XAU/USD pair will remain influenced by USD fluctuations and general market sentiment.
Technical Analysis: Gold’s Potential to Form an Uptrend
From a technical perspective, gold is showing signs of rising channel formations, indicating potential short-term uptrends. Positive indicators on the daily chart hint that any daytime dips might attract buyers, with support around the $3,345 area. A significant break below this level would challenge the current optimistic outlook, potentially dragging gold prices down further from recent highs.
The $3,400 mark stands out as a critical resistance level, with any upward movement in the XAU/USD reaching the $3,434-$3,435 area. A series of robust purchases may propel prices beyond the $3,451-$3,452 range, revisiting highs not seen in nearly two months, and possibly breaking the psychological barrier of $3,500, coinciding with the channel’s upper limit.
