Gold prices have climbed for a second consecutive session on Monday, inching closer to the upper boundary of a long-standing trading range, with the $3,370 zone acting as a significant technical hurdle. Investors are once again leaning toward safe-haven assets, particularly the yellow metal, as geopolitical and trade uncertainties escalate.
At the center of the turmoil is US President Donald Trump’s aggressive tariff agenda. With a fresh round of import duties set to kick in on August 1st, market participants are increasingly anxious about global growth. Trump’s strategy now reportedly includes a proposed 15–20% tariff on European Union goods, even if trade negotiations succeed a move that’s significantly rattled investor confidence.
Such developments have reignited gold’s safe-haven appeal, helping it attract inflows from jittery traders looking to hedge risk in their portfolios.
US Dollar Softens on Mixed Fed Signals, Boosting Gold
A notable driver behind gold’s upward move is the softening US Dollar, which has remained under pressure following conflicting messages from Federal Reserve officials regarding monetary policy.
Last week, Federal Reserve Governor Christopher Waller suggested that the case for a July rate cut is growing, especially in light of the economic drag posed by Trump’s trade actions. However, with inflation risks also rising due to the pass-through effects of tariffs on consumer prices, the Fed remains cautious.
The mixed messaging has muddled the rate outlook: on one hand, markets are pricing in two 25-bps cuts by year-end; on the other, Fed Chair Jerome Powell has signaled inflation could heat up this summer, which might justify a more hawkish hold.
This policy uncertainty has weighed on the greenback, making gold a non-yielding asset priced in USD more attractive.
Gold Faces Resistance Near Multi-Week Range Top
Despite the bullish momentum, gold’s rally has not been unbounded. The precious metal now faces stiff resistance near the $3,370 level, which has capped gains in recent weeks.
Technical traders note that unless XAUUSD manages to breach this ceiling with strong follow-through buying, upside potential may remain limited in the near term. Additionally, growing acceptance that the Fed might delay any aggressive rate cutting amid resilient consumer sentiment could act as a short-term drag on gold’s further appreciation.
For now, traders are staying cautious, preferring to wait for stronger signals before betting on a breakout.
Consumer Sentiment Adds Complexity to the Fed’s Dilemma
Data released on Friday showed a surprising rise in US consumer sentiment, as the University of Michigan’s index rose to 61.8 in July. This unexpected boost in confidence underscores resilience in the US economy and presents yet another challenge for Fed policymakers.
Stronger consumer sentiment could justify holding rates steady — or at the very least, slowing the pace of cuts — as it signals that American households are relatively unfazed by rising costs and trade noise, at least for now.
This resilience provides a partial floor for the US Dollar and tempers the bullish narrative for gold, keeping price action range-bound despite geopolitical triggers.
Fed’s Rate Path Hinges on Inflation-Tariff Dynamics
One of the more intriguing elements in the Fed’s policy calculus is how the tariff-driven inflation interacts with its mandate. While tariffs are generally inflationary, the Fed must discern whether the price pressures are transitory or entrenched.
Powell has acknowledged that prices could rise due to higher import costs, but the broader question is whether this inflation is demand-led or cost-pushed. The former may justify tighter policy; the latter typically does not.
With consumer prices showing some signs of upward momentum, and yet economic growth risks rising, the Fed walks a fine line — and gold stands to benefit from either indecision or dovishness.
No Major US Data Scheduled: Focus Shifts to Trade Headlines and PMIs
The US economic calendar is relatively light to start the week, offering no significant data releases on Monday. This leaves traders to parse headlines related to trade, politics, and central bank commentary for short-term direction.
However, global flash PMI data due later in the week could inject volatility into gold markets, especially if the numbers indicate deeper contraction in global manufacturing or services — both of which are sensitive to trade frictions.
Until then, the broader sentiment will likely remain cautious, favoring safe-haven flows and providing mild support to gold — albeit within a technically constrained range.
Technical Outlook: $3,370 Resistance Looms, but Breakout Could Be Explosive
From a technical perspective, gold remains in a consolidation pattern, hovering between $3,290 and $3,370 for several weeks now. The $3,370 level acts as a ceiling, with price repeatedly failing to breach it decisively.
If bulls manage a clean break and hold above this key zone, the next leg higher could quickly target $3,400 and beyond, especially if global macro conditions worsen or the USD breaks lower.
On the flip side, a failure to clear resistance could see gold retrace toward $3,320 or even back to the lower end of its range near $3,290–$3,300, especially if upcoming data or Fed commentary leans hawkish.
Geopolitical Flashpoints to Watch This Week
Several high-stakes developments could jolt gold prices in the days ahead:
New tariff announcements or retaliations, particularly from the EU or China
Comments from Fed speakers that clarify or contradict Powell/Waller messaging
Deterioration in EU-US trade talks or escalation in Trump’s tariff rhetoric
Disappointing global PMI figures that heighten recession concerns
With risk appetite fragile and volatility creeping back into markets, gold’s allure remains intact — but the precious metal needs a definitive push to escape its recent range.
Conclusion: Gold Caught in Tug of War Between Trade Worries and Fed Caution
Gold prices are riding a wave of safe-haven demand and a weakening US Dollar, but the momentum is being checked by technical resistance and a lack of policy clarity from the Fed. Until the central bank’s path becomes clearer or Trump’s trade measures spark broader risk aversion the XAUUSD pair may continue to oscillate in a familiar range.
Investors will watch for any signs of a breakout or breakdown with heightened scrutiny, as the next directional push could define the metal’s trajectory for the rest of the quarter.
Disclaimer: This blog is for informational purposes only and does not constitute financial advice. Always conduct your own research and consult a professional advisor before making investment decisions.
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