- Gold prices fluctuate around $3,335 on Thursday, showing signs of volatility compression.
- President Trump is anticipated to reveal multiple trade agreements ahead of the July 9 tariff deadline.
- The passage of Trump’s tax legislation has raised concerns regarding fiscal risks in the U.S.
The gold price (XAU/USD) is performing well at $3,335 during European trading on Friday, remaining within Thursday’s trading range. It seems the yellow metal is struggling to find its direction as investors await clarity on how much President Trump will impose tariffs on trading partners.
Trump has indicated multiple times that mutual tariff agreements will allow for trade negotiations to be finalized with partners since his announcement on April 2.
So far, Washington has reached a trade deal with the UK and Vietnam, and a framework agreement with China has been established. Earlier in the day, Trump expressed optimism that India would reach agreements with several countries, mentioning his hopes for securing deals with India by the July 9 deadline.
Earlier, Trump stated he would start “sending a letter regarding trade tariffs from Friday.”
Market analysts believe the potential imposition of U.S. tariffs on key trading partners like Japan, the Eurozone, Canada, and Mexico, coupled with not finalizing trade agreements, could mitigate the global trade conflict.
In theory, rising geopolitical tensions typically increase demand for safe-haven assets like gold.
Meanwhile, the support for Trump’s significant economic bill from the House has contributed to heightened demand for gold as a safe haven. Investors are uneasy that Trump’s plan could escalate the already high national debt by $3-3.5 trillion over the next decade, amplifying fiscal concerns.
Gold Technical Analysis
Gold prices are approaching the upward trendline of a rising triangle pattern on the daily chart, which began from a low of $2,957 on April 7. Horizontal resistance is marked around $3,500 since April 22. If prices fall below this upward trendline, it could trigger a sharp decline.
Precious metals linger near the roughly 3,342 exponential moving averages (EMAs) from the past 20 days, indicating uncertainty in short-term trends.
The 14-day relative strength index (RSI) fluctuates between 40.00-60.00, suggesting a sideways trend.
Looking ahead, if gold can surpass the $3,500 psychological level, it may move into a challenge-free zone, with potential resistances at $3,550 and $3,600.
On the flip side, if gold prices drop below the $3,245 low from May 29, it could fall to support around $3,200, with a previous low of $3,121 noted on May 15.
Gold Daily Chart
Gold FAQ
Gold has historically been significant as a form of value and exchange. Beyond its visual appeal, it’s frequently seen as a safety net during turbulent times and is regarded as a hedge against inflation and currency depreciation.
Central banks, aiming to support their currencies in unstable times, often purchase gold to diversity their reserves, thereby reinforcing economic strength. In 2022, central banks added 1,136 tonnes of gold to their reserves, the highest annual acquisition recorded. Countries like China, India, and Turkey are quickly boosting their gold reserves.
Gold often moves inversely to the U.S. dollar and Treasury securities. When the dollar depreciates, gold prices tend to rise, providing a diversification option for investors during volatility. Gold is also inversely related to high-risk assets—strong stock market rallies can suppress gold prices, while sell-offs can enhance gold’s appeal.
Various factors can influence gold prices, particularly fears of geopolitical issues or recession, which can boost gold’s appeal as a safe asset. As a non-yielding asset, gold usually benefits from lower interest rates, while higher rates tend to put downward pressure on it. Ultimately, the behavior of the U.S. dollar is crucial, as gold prices are denominated in dollars. A strong dollar typically suppresses gold prices, whereas a weaker dollar will likely push them higher.
