Gold (XAU/USD) slipped slightly on Tuesday after posting gains over the past two sessions. Despite the pullback, the precious metal remains supported by heightened geopolitical and monetary concerns, particularly as markets brace for the looming August 1 tariff deadline set by US President Donald Trump.
The spotlight remains on the ongoing trade talks between the United States and the European Union. With less than two weeks left, fears are mounting that a trade deal may not materialize in time. President Trump has threatened to impose a steep 30% tariff on EU exports if no agreement is reached. In response, the EU is reportedly preparing broader retaliatory measures, according to diplomats cited by Reuters. Even Germany, once hesitant to escalate tensions, has joined France in pushing for a firmer stance.
Meanwhile, growing concerns about the Federal Reserve’s independence are also shaping market sentiment. US Treasury Secretary Scott Bessent recently criticized the Fed’s expanded role beyond monetary policy, calling for a review of its institutional focus. These remarks add to speculation stirred by President Trump’s ongoing dissatisfaction with Fed Chair Jerome Powell, whom he has accused of being too slow to lower interest rates. While Trump denied reports suggesting Powell could be fired, the rumors persist.
Compounding the pressure, Fed officials appear divided on the rate outlook. While some, like Governor Christopher Waller, advocate for immediate rate cuts to mitigate economic risks, others such as Governor Adriana Kugler and San Francisco Fed President Mary Daly argue for a cautious approach. Daly noted that expecting two cuts this year is reasonable, though she warned against delaying action for too long. Kugler emphasized the importance of keeping policy restrictive to prevent inflation expectations from rising.
On the European side, the European Central Bank (ECB) is expected to hold its key interest rate steady at 2.0% during its meeting on Thursday. Market attention will soon pivot to the US Federal Reserve’s policy decision next week, which could further impact gold and currency markets.
Market Movers: Gold Eases Amid Firming US Dollar
The US Dollar Index (DXY) is stabilizing near 97.90 after falling more than 0.5% in the previous session. The greenback has found renewed strength amid cautious risk sentiment, which typically weighs on gold prices by making the metal more expensive for non-dollar holders.
Adding to the political tension, Republican Congresswoman Anna Paulina Luna has formally accused Fed Chair Powell of perjury related to the Fed’s controversial renovation plans for its Washington, D.C. headquarters—an issue that could further complicate the Fed’s credibility and leadership stability.
Technical Outlook: Gold Still Bullish Despite Short-Term Pullback
At the time of writing, gold is trading around $3,390 per ounce. Technical indicators suggest that the yellow metal is consolidating within an ascending channel, reflecting a still-bullish outlook. The 14-day Relative Strength Index (RSI) remains above 50, reinforcing the positive momentum.
On the upside, key resistance lies at the three-month high of $3,452 (marked on June 16), with the next major level being the all-time high of $3,500 recorded on April 22. A break above these levels could pave the way toward the upper boundary of the current channel, near $3,630.
Conversely, immediate support is seen at the 9-day Exponential Moving Average (EMA) of $3,358. A drop below this level could trigger further downside toward the 50-day EMA and the lower channel boundary around $3,316.
