Gold (XAU/USD) remains mildly bid for the second straight session on Monday, but the upside momentum lacks strength as prices continue to hover within a well-defined, multi-week range. The precious metal finds support from ongoing global trade uncertainties and a subdued US Dollar, yet investors remain cautious in the absence of a decisive bullish trigger.
Trade Tensions Support Safe-Haven Demand
Lingering concerns over the economic fallout from rising US tariffs — particularly ahead of the August 1 deadline — are bolstering safe-haven demand for gold. Reports that President Donald Trump is considering a 15%–20% levy on EU imports, even in the event of a trade agreement, have further rattled market sentiment. This backdrop continues to act as a tailwind for gold, keeping downside risks limited for now.
Mixed Fed Signals Weigh on USD, Offer Modest Support to Gold
The US Dollar (USD) remains on the defensive below last week’s highs, pressured by conflicting signals from the Federal Reserve. Although Fed Governor Christopher Waller recently supported the idea of a rate cut in July, traders believe the central bank may delay action until September. Fed Chair Jerome Powell’s expectation that tariffs could push inflation higher this summer complicates the rate outlook and continues to inject volatility into USD performance.
While rate cut expectations generally benefit non-yielding assets like gold, the market currently sees only limited scope for further Fed easing in 2025, with pricing suggesting two 25-basis-point cuts by year-end. This dampens gold’s bullish prospects and contributes to the current sideways movement in prices.
Data and Sentiment Indicators Offer Limited Direction
Last Friday’s release of the University of Michigan’s Consumer Sentiment Index — which unexpectedly rose to 61.8 — highlighted improved consumer optimism, reinforcing resilience in the US economy. This data point helped cushion the USD from deeper losses and further limited gold’s upward potential.
With no major US economic releases scheduled for Monday, gold is likely to remain range-bound, driven primarily by headlines around global trade tensions and Fed rate expectations. Looking ahead, traders will focus on this week’s flash global PMIs for more insight into macroeconomic trends and potential catalysts for XAU/USD movement.
