Gold Price Holds Below $3,400 Amid Trade Optimism, but Downside Risks Appear Limited

Gold (XAU/USD) remains under pressure in Thursday’s Asian session, extending its pullback from Wednesday’s high near $3,440. The yellow metal trades below the $3,400 mark as upbeat sentiment from recent trade agreements between the U.S., Japan, and the European Union dampens safe-haven demand. However, growing uncertainty around Federal Reserve policy and a weaker U.S. Dollar could cushion gold from deeper losses.

Trade Optimism Weighs on Gold, But Fed Uncertainty Offers Support

Gold prices are feeling the heat from easing geopolitical tensions, especially after U.S. President Donald Trump announced a finalized trade deal with Japan and suggested progress on a 15% tariff deal with the European Union. These developments have boosted market confidence and curbed demand for traditional safe-haven assets like gold.

Still, traders remain cautious over the Federal Reserve’s next moves. Despite Trump’s ongoing pressure for interest rate cuts, markets are not fully pricing in a policy shift at the Fed’s July meeting. Political interference concerns—highlighted by Trump’s repeated attacks on Fed Chair Jerome Powell—are also keeping the U.S. Dollar under pressure, supporting gold.

Additionally, dovish signals from Fed officials including Governor Christopher Waller and Vice Chair Michelle Bowman, who favor rate cuts as early as July 30, have kept the USD near two-week lows. This weak dollar backdrop continues to provide a floor for gold prices.

Key Data Ahead: PMIs, ECB Decision, and U.S. Jobless Claims

Market participants now await a series of high-impact data releases to gauge global economic momentum. Flash PMI figures from major economies and the European Central Bank’s (ECB) rate decision could inject fresh volatility into gold markets. Meanwhile, U.S. weekly jobless claims and new home sales data will influence the dollar’s direction and help shape near-term moves in gold.

Technical Outlook: XAU/USD Holds Uptrend Despite Pullback

Technically, gold maintains a short-term bullish structure, trading within an ascending channel that began in early July. Support is seen near the $3,370–$3,368 region, which previously acted as a strong resistance zone. A break below this could test the channel’s lower boundary near $3,333–$3,332. A sustained move under that level might flip the bias toward the bearish side.

On the upside, a bounce back above $3,400 would face resistance around $3,438–$3,440. A breakout above this zone could reignite bullish momentum and open the door for a retest of the all-time high near $3,500.

---

Conclusion:
While gold remains under pressure due to improving trade sentiment, the uncertain outlook for U.S. monetary policy and a weakening dollar suggest that downside may be limited. Traders should watch key economic data and central bank commentary for the next directional cues.

Stay Updated with Daily Forex Pakistan.