- Gold prices dip below $3,300 as investors react to global trade uncertainties.
- Trump is set to announce new tariffs affecting over seven nations.
- Investors are eager for the forthcoming release of the FOMC minutes.
Gold prices (XAU/USD) are expected to fall beneath the $3,300 support level on Wednesday. The pressure on precious metals is mounting ahead of President Trump’s announcement regarding new mutual tariff fees for over seven countries that did not reach a trade agreement during the recent 90-day pause.
Trump mentioned, “Tomorrow morning, we’ll announce at least seven countries involved in trade, with more details coming in the afternoon. Appreciate your focus on this issue!”
This weekend, he will introduce new tariff fees on 14 countries, notably Japan and South Korea, which are significant trading partners for the U.S.
The anticipated impact of these new tariffs seems limited, as the names of major trading partners are clearly highlighted. Trump has stated that trade talks with China, the eurozone, and India are making good progress.
Generally, rising tensions in the global economy typically boost the demand for safe-haven assets, such as gold.
At the same time, the U.S. dollar (USD) has a somewhat muted effect on gold prices. The U.S. Dollar Index (DXY), which measures the dollar against six other currencies, is holding near a weekly high of around 97.80, recorded on Tuesday.
Moreover, President Trump has proposed a 50% tariff on copper and a staggering 200% on pharmaceuticals.
Looking ahead, investors are keenly interested in the minutes from the June 17-18 Federal Open Market Committee (FOMC) meeting, where the Federal Reserve (Fed) maintained rates between 4.25% and 4.50%.
Technical Analysis of Gold
Gold prices are currently below ascending trendlines that have created upward triangles in the daily time frame. The horizontal resistance from these patterns is positioned around $3,500, starting back on April 22nd. The breakdown beneath these upward trendlines could lead to a significant drop.
The recent movements suggest that precious metals are trading below the 20-day exponential moving average (EMA) at $3,334, indicating a bearish short-term trend.
The 14-day relative strength index (RSI) is fluctuating between 40.00 and 60.00, reflecting a sideways trend.
If gold slips below $3,245, it could test the round-level support of $3,200, with a previous low at $3,121 marked on May 15th.
On the other hand, if gold prices decisively break above the psychological barrier of $3,500, it may enter a more favorable territory, with potential resistance at $3,550 and $3,600.
Gold Daily Insights
Gold FAQ
Gold has been significant throughout history, often serving as a form of value and exchange. Beyond its luster, it is now commonly regarded as a safe haven asset. This makes it appealing during uncertain times, as it’s seen as a hedge against inflation and currency depreciation.
Central banks hold substantial gold reserves to support their currencies during turbulent times. This strategy helps enhance the perceived strength of their economy. In fact, central banks added 1,136 tonnes of gold to their reserves in 2022, valued at around $70 billion, marking the largest acquisition in recent recorded history.
Gold generally exhibits an inverse correlation with the U.S. dollar and U.S. Treasury securities. When the dollar weakens, the price of gold usually increases, offering a diversification strategy for investors during times of market distress. Similarly, fluctuations in the stock market can affect gold prices—market rallies typically put downward pressure on gold, while declines may boost its value.
Several factors contribute to price movements. Geopolitical instability or fears of economic downturns can quickly push gold prices upward due to its safe haven status. Also, because gold does not yield any returns, its price usually rises when interest rates are low. Conversely, higher interest rates can weigh on its value. However, the behavior of the U.S. dollar remains a key driver, as gold is priced in dollars. A strong dollar can suppress gold prices, whereas a weak dollar might encourage a rise.
