Gold (XAU/USD) is trading sideways in a narrow range on Friday during the Asian session, unable to build on Thursday’s rebound from near $2,309—a one-week low. The US Dollar has pulled back slightly from its recent highs, following dovish comments from Federal Reserve Governor Christopher Waller, offering mild support to the yellow metal. However, concerns over prolonged high US interest rates and a prevailing risk-on sentiment are capping gold’s upside.
The metal appears poised to end its three-week winning streak with modest losses.
Mixed Fed Signals and Tariff Tensions Shape Market Mood
Fed Governor Waller stated late Thursday that growing economic risks support the case for a rate cut, suggesting the Fed should consider easing in July due to signs of a weakening labor market. This dovish outlook pressured the US Dollar in early Friday trade. Meanwhile, markets are pricing in up to 50 basis points of rate cuts from the Fed this year.
Still, the recent strength in US economic data, including a 0.6% rise in June retail sales and a fifth straight weekly drop in initial jobless claims to 221,000, suggests resilience in consumer spending and the labor market. These factors may reduce the urgency for the Fed to ease policy, offering support to the USD and limiting gold’s gains.
Additionally, Fed officials Adriana Kugler and Raphael Bostic emphasized the need for caution, signaling the current restrictive stance may remain for some time due to inflation concerns and economic uncertainty.
Trump’s Tariff Spree Fuels Safe-Haven Demand—But Not Enough
Further complicating the outlook is US President Donald Trump’s unpredictable trade policy. Trump recently announced a 50% tariff on copper imports and warned 25 countries of new tariffs starting August 1. He also plans to notify over 150 countries that additional levies of 10%–15% may be applied. These developments raise concerns about global economic stability, lending some safe-haven support to gold.
Outlook
Despite the modest USD pullback and rising geopolitical tensions, the lack of strong bullish momentum in gold suggests investors remain cautious. With the Fed likely to keep rates steady at 4.25%–4.50% later this month, gold could face headwinds. Traders now turn their attention to the upcoming US Preliminary Michigan Consumer Sentiment and Inflation Expectations reports for fresh cues.
Gold price remains confined in multi-week-old range; $3,365-3,366 pivotal hurdle holds the key for bulls
From a technical perspective, the recent range-bound price action witnessed since the beginning of this month constitutes the formation of a rectangle chart pattern and points to indecision among traders. Moreover, neutral oscillators on the daily chart warrant some caution before positioning for the next leg of a directional move. Hence, any further slide might continue to find decent support ahead of the $3,300 round figure. A convincing break below, however, could make the Gold price vulnerable to accelerate the fall towards the July swing low, around the $3,248-3,247 zone.
On the flip side, any positive move beyond the $3,352 immediate hurdle could attract fresh buyers and remain capped near the $3,365-3,366 region, or the top boundary of the short-term trading range. A subsequent move beyond the latter, however, could trigger a short-covering rally and allow the Gold price to reclaim the $3,400 round figure. The upward trajectory could extend further towards testing the next relevant hurdle near the $3,434-3,435 area.
