Gold Prices Rise Amid Trade Tensions

• Gold prices are expected to reach a new multi-week high on Monday, driven by increased demand for safe-haven assets due to escalating trade tensions.
• The ongoing decrease in expectations for Federal Reserve interest rate cuts is providing support for the USD, which could limit the growth of non-dollar assets like gold.
• Traders might hold off on making bold moves, likely waiting for upcoming inflation reports.

Gold Price (XAU/USD) has maintained a positive trend for the fourth consecutive day, trading above $3,370 and nearing a three-week high early in Monday’s European session. The new tariffs announced by US President Donald Trump are shaking up global markets; these include a 30% tariff on products from the European Union and Mexico starting August 1. This tariff situation is a major factor fueling demand for safe-haven investments. However, there’s been no significant follow-through to boost prices throughout the day, leading bullish traders to proceed with caution.

Traders are dialing down their expectations for immediate interest rate cuts by the Federal Reserve, largely due to the continuing strength of the US labor market. This might push the US dollar (USD) to its highest level since June 25, which could act as a barrier for gold prices. Many are likely to wait for the latest US inflation data to gain insights into the Fed’s potential interest rate decisions, which would impact the USD and influence demand for precious metals.

Market Update: Gold Prices Steady Amid Trade Concerns

• Investor sentiment may weaken due to President Trump’s recent tariff threats aimed at Mexico and the European Union, following more than 20 similar warnings issued in the past week.
• The latest developments are likely to dampen investor interest in riskier assets, which could support gold prices as a safe haven. However, the unclear signals regarding the Federal Reserve’s rate-cutting agenda may prevent aggressive bullish endeavors from gold traders.
• Minutes from the FOMC meeting held on June 17-18 show a majority of policymakers expressing concern over rising inflation linked to Trump’s trade policies and a robust US labor market. Only a few believe rates will be cut during this month, helping the USD maintain strength near multi-week highs and capping gold pricing.
• Investors are looking forward to upcoming data, including the US consumer inflation figures for June, set to be released on Tuesday, followed by the US Producer Price Index (PPI) on Wednesday. This critical data, combined with remarks from notable FOMC members, could offer more insights into the Fed’s policy direction amid speculation of a 50 basis point cut by December.
• The ongoing uncertainty around Trump’s trade policy implementation should continue to favor traditional safe haven assets like gold.

Gold Prices Poised to Cross $3,400 Mark

Technically speaking, breaking beyond the $3,358-$3,360 resistance zone, as indicated by the 100 Simple Moving Average (SMA) on last week’s four-hour chart, was a key indicator for the XAU/USD bulls. This suggests that the path of least resistance favors gold prices. Therefore, a continuation of momentum to reclaim the $3,400 threshold seems quite plausible.

On the flip side, the $3,240 level seems to provide immediate support. Should prices drop, there may be a buying opportunity around the $3,326 mark, which could help limit declines near the $3,300 level. Following this, a region between $3,283 and $3,282, which was previously touched last Tuesday, could signal further vulnerabilities for the XAU/USD pair, potentially accelerating a decline towards the July low of approximately $3,248-3,247.