Gold (XAU/USD) slipped from its monthly peak near $3,439—touched during early Wednesday trading in Asia—snapping a three-day winning streak. The retreat comes as global risk sentiment improved following an announcement from U.S. President Donald Trump about a finalized trade deal with Japan, prompting investors to shift away from safe-haven assets like gold.
The deal, which includes Japan agreeing to reciprocal 15% tariffs and opening its market to U.S. goods such as cars, trucks, rice, and other agricultural products, sparked a fresh risk-on mood across markets. This shift, along with a modest rebound in the U.S. Dollar from a two-week low, led to some profit-taking in gold during the Asian session.
Despite the dollar’s bounce, its momentum appears limited due to ongoing uncertainty surrounding the Federal Reserve’s path on interest rate cuts. That uncertainty is offering some support to gold prices, as the non-yielding metal often benefits when expectations for lower rates rise.
From a broader perspective, while gold faces pressure from reduced safe-haven demand and a stronger dollar, the lack of clear direction from the Fed is keeping aggressive dollar bulls at bay. Additionally, recent political moves—such as Trump’s public criticism of Fed Chair Jerome Powell and Treasury Secretary Scott Bessent’s call for an internal review of the Fed—have fueled concerns about the central bank’s independence, adding a layer of caution to market sentiment.
As traders await the release of U.S. Existing Home Sales data later today, the spotlight will be on the upcoming global flash PMI readings, which are expected to provide more insight into economic momentum and investor risk appetite. These releases could play a key role in determining the next directional move for gold.
