Gold price (XAU/USD) experiences a short-term pullback but maintains its bullish trend amid a weaker US Dollar. Investor caution persists as concerns about US fiscal health and geopolitical tensions continue influencing the market. Despite fading safe-haven demand, multiple factors support the yellow metal’s upward potential.
Key Points
- Gold price shows an intraday decline while broader bullish momentum remains intact.
- The US Dollar declines as expectations grow for Federal Reserve interest rate cuts in 2025.
- Persistent geopolitical tensions help limit downside for the non-yielding metal.
- Technical support near $3,325 suggests further upside remains possible short term.
Market Context
US President Donald Trump delayed the 50% EU tariff implementation to July 9, easing some trade tensions. This surprise decision eased short-term safe-haven demand, putting temporary downward pressure on gold prices. Nonetheless, market attention remains fixed on worsening US fiscal projections, which serve to undermine confidence in the USD.
Congress recently advanced a controversial bill featuring massive tax cuts and expansive spending. This legislation may increase the federal deficit by over $4 trillion in the next decade. These concerns weigh heavily on investors’ minds, reinforcing gold’s appeal as an inflation hedge and store of value.
Inflation data also came in softer than expected last week. Lower CPI and PPI prints raised hopes for potential monetary easing. Traders are now pricing in two rate cuts by the Federal Reserve in 2025, fueling a US Dollar retreat and supporting gold.
Technical Insights
Gold’s recent movement adheres to an ascending trendline visible on both hourly and daily charts. Support near $3,325 has held firm so far, maintaining the commodity’s short-term bullish structure. A break below this level could prompt additional selling pressure, targeting the $3,300 zone.
Further downside might extend to the 200-period SMA at $3,283, a critical level for future price direction. On the upside, a move past Friday’s high near $3,366 would likely open the door to retesting $3,400. Above this level, $3,430 stands as crucial resistance before April’s record price peak around $3,500.
Expert Opinions and Market Sentiment
Minneapolis Fed President Neel Kashkari said higher tariffs could raise the chance of stagflation. His comments further pressured the USD and lent support to gold. Meanwhile, Russian forces intensified attacks across Ukraine, escalating global tensions.
These developments came as Israeli airstrikes in Gaza continued, reinforcing a risk-averse backdrop. These global tensions often make gold more appealing during uncertain times.
All eyes now turn to upcoming data releases and policy commentary. This week’s FOMC minutes, durable goods data, and PCE Price Index could all provide fresh clues on interest rate trends.
Conclusion
Despite short-term weakness, gold price maintains a strong bullish bias backed by fundamental and technical support. Worries over the US fiscal outlook, rate cut expectations, and ongoing global unrest are key factors driving demand. Traders should monitor support near $3,325 and watch for a potential breakout above $3,400 in the days ahead.
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Gold prices dipped due to reduced safe-haven demand after the delay in US tariffs on the EU. Yes, gold remains in a bullish trend due to a weak US Dollar and ongoing geopolitical risks. A weaker US Dollar makes gold cheaper for other currencies, boosting demand and supporting prices. Support is expected near the $3,325 level, which aligns with an ascending trendline on the charts. US fiscal concerns, rate cut expectations, and geopolitical tensions are the major price drivers now. If gold breaks above $3,430, it could retest April’s all-time high near the $3,500 level. Rate cuts lower bond yields, increasing gold’s appeal since it doesn’t pay interest, boosting demand.FAQs About Gold Price Trends and Market Outlook
1. Why did the gold price dip recently?
2. Is gold still considered bullish despite the recent dip?
3. How does the US Dollar affect gold prices?
4. What technical level should traders watch for gold support?
5. What events are currently influencing gold prices the most?
6. Could gold prices reach a new high soon?
7. Why are rate cuts by the Federal Reserve important for gold?
