- Gold (XAU/USD) retreats slightly during Tuesday’s Asian session, failing to build on Monday’s rebound from a one-week low just below $3,300.
- Diminishing expectations of a July rate cut by the US Federal Reserve weigh on the non-yielding metal.
- Ongoing trade tensions and a weaker US Dollar may help cushion the downside.
Gold prices edge lower on Tuesday as traders dial back expectations for near-term rate cuts by the Federal Reserve. While geopolitical uncertainty and trade jitters stemming from President Donald Trump’s tariff threats continue to support the safe-haven appeal of gold, the reduced likelihood of monetary easing is capping upside momentum.
Trade Fears and Fed Outlook in Focus
Investor sentiment remains fragile amid concerns over the global economic impact of Trump’s “reciprocal tariffs,” set to take effect on August 1. Trump has warned that countries aligning with BRICS’ “anti-American” policies will face an additional 10% tariff, signaling a broader protectionist push.
This inflationary outlook has led markets to anticipate that the Fed may hold interest rates steady for longer, limiting gold’s appeal in the short term. The US Dollar strengthened to a nearly two-week high on Monday in response, further pressuring the precious metal.
However, risk aversion continues to simmer, with global equity markets flashing red. This backdrop could limit losses for gold, as investors hedge against economic and political uncertainty. A modest pullback in the US Dollar may also offer near-term support for the XAU/USD pair.
Market Awaits Fed Minutes for Clarity
With no major US data due on Tuesday, all eyes will be on Wednesday’s FOMC meeting minutes. Traders will be looking for further insight into the Fed’s rate path and inflation outlook, both of which will be key drivers for the US Dollar and gold in the sessions ahead.
Technical Outlook: Eyes on $3,300 Support
Gold’s recovery stalled at the 100-period SMA on the 4-hour chart, located near the $3,347–$3,348 region. This level, along with resistance around $3,358–$3,360, remains a critical barrier. A sustained move above these levels could trigger short covering and push gold toward the $3,400 psychological mark.
On the downside, immediate support lies near $3,300–$3,295. A break below this zone would expose the $3,270 level, with extended losses possibly reaching $3,248–$3,247 — the June swing low.
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