Gold (XAU/USD) shows a mild recovery during Tuesday’s European session, attempting to rebound from the three-week low near $3,300 touched on Monday. The uptick is supported by lingering market uncertainty ahead of key central bank events and crucial U.S. macroeconomic data. However, upside momentum remains limited as traders weigh broader macro factors.
The US Dollar remains firm amid growing conviction that the Federal Reserve will maintain higher interest rates for an extended period, which acts as a headwind for the non-yielding gold. With the FOMC meeting outcome due on Wednesday, investors are hesitant to take aggressive long positions in gold until further clarity emerges on the Fed’s policy trajectory.
Market Drivers:
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US-EU Trade Deal Boosts Risk Appetite:
A framework trade agreement between the US and European Union over the weekend, following a similar US-Japan deal, has eased global trade tensions. Additionally, top-level trade talks between the US and China are set to resume today, with Treasury Secretary Scott Bessent and China’s Vice Premier He Lifeng aiming to extend the trade truce for another three months. -
USD Surge Pressures Gold:
The US Dollar surged on Monday, marking its largest daily gain since May and putting it on track for a 1.5% rise in July—its first monthly gain of the year. This weighed heavily on gold, dragging prices down for a fourth straight session. However, USD bulls have paused ahead of fresh signals from the Fed regarding interest rate outlook. -
FOMC in Focus:
The two-day FOMC policy meeting begins Tuesday, with the Fed expected to keep rates unchanged. Markets will closely watch the post-meeting statement and Chair Jerome Powell’s remarks for insights into the future rate-cut path and economic assessment. -
Geopolitical Risk Still Lingers:
President Donald Trump issued a new 10–12 day deadline for Russia to show progress in ending the war in Ukraine. He threatened severe sanctions and 100% secondary tariffs on countries importing Russian goods, keeping geopolitical risks alive and lending some support to gold’s safe-haven appeal. -
Key US Data Ahead:
Traders are also eyeing today’s US economic calendar, featuring JOLTS Job Openings and the Conference Board’s Consumer Confidence Index. These releases could influence USD sentiment and generate fresh momentum for gold in the short term.
Technical Outlook: Limited Upside, Risk Skewed to Downside
Technically, repeated rejections near the $3,434–$3,435 zone have created a multiple-top formation on the daily chart. Momentum indicators are beginning to tilt bearish, suggesting potential for further downside movement.
A decisive break below the $3,300 level would reinforce the bearish bias and expose the XAU/USD pair to the next support around $3,260–$3,255. This zone aligns with the 100-day Simple Moving Average (SMA) and is seen as a critical support. A clean break below could trigger a deeper correction.
On the upside, any recovery may face initial resistance near the $3,340 level. A break above this could see gold testing the $3,367–$3,368 zone. Sustained buying beyond this region could trigger a short-covering rally toward the $3,400 round figure. However, the $3,434–$3,435 zone remains a strong resistance barrier. A breakout above this area would invalidate the near-term bearish setup and open the door for a potential move toward the $3,500 psychological mark—last tested in April.
