Highlights:
- Gold dipped 0.17% this week, closing at $3,350.10 amid Fed policy ambiguity and shifting global trade tensions.
- Trump’s tariff threats sparked early buying, but momentum faded with delayed retaliation from the EU.
- Mixed inflation signals and strong U.S. data complicated expectations for Fed rate cuts in 2025.
Gold Slips as Market Juggles Fed Uncertainty and Tariff Volatility
Gold (XAU/USD) edged lower this week, posting a modest 0.17% decline as investors reacted to a complex mix of macroeconomic drivers. The precious metal struggled to hold gains as upbeat U.S. economic data dampened expectations for aggressive Federal Reserve easing, while geopolitical uncertainty and tariff drama kept safe-haven demand alive.
After touching intraday highs on tariff-related buying, gold’s momentum faded as the European Union held off on retaliatory action against Trump’s 30% import duties, announced for August 1. This delay signaled possible room for negotiation, tempering safe-haven appetite and leading to consolidation near $3,350.
Tariffs and Inflation: Will the Fed Blink?
The inflation outlook was further clouded by the impact of Trump-era and newly proposed tariffs. The June Consumer Price Index showed rising costs in core goods—like electronics and furniture—linked to imported inflation. With these price increases building, traders are now questioning whether the Fed will prioritize inflation containment over rate cuts.
Meanwhile, the administration adjusted other tariffs—cutting Indonesian duties to 19% and signaling easing tensions with Vietnam—indicating a strategic approach to bilateral deals before broader enforcement.
Fed Independence and Market Volatility in Focus
Markets briefly panicked on rumors that President Trump might remove Fed Chair Jerome Powell, only for him to walk back the statement later. Still, the event underscored growing concerns over central bank independence.
On the policy front, Fed Governor Christopher Waller advocated for rate cuts due to softening labor market data, while Governor Adriana Kugler warned against premature easing. Inflation data did little to settle the debate: while CPI rose 2.7% year-over-year, the core reading met forecasts at 2.9%, and Producer Price Index growth remained flat—offering no clear policy signal.
Strong U.S. Data Curbs Dovish Hopes
Markets further trimmed expectations for rate cuts after resilient U.S. economic releases. Retail sales bounced back with a 0.6% monthly gain in June, while jobless claims fell to a three-month low, showing the economy is still holding firm. This strength boosted the U.S. Dollar Index by 0.61% for the week—pressuring gold prices by making the metal costlier for foreign buyers.
Gold’s Outlook: Holding Pattern Amid Mixed Signals
Looking ahead, the gold market is likely to remain range-bound until more clarity emerges on two key fronts: Fed policy direction and global trade developments. While strong fundamentals are dampening the case for rate cuts, the uncertainty premium tied to tariffs and geopolitical tension continues to support gold as a defensive asset.
UBS analyst Giovanni Staunovo echoed this sentiment, noting that policy risk and global instability still make gold attractive for long-term buyers.
Technical Picture: Range-Bound but Still Bullish Bias
- Immediate Support: $3,310.48 (weekly pivot)
- Major Resistance: $3,451.53 (swing high)
- Bearish Trigger: A break below $3,244.41
- Bullish Continuation Target: $3,578 (ABCD pattern projection)
- Long-Term Support: 52-week MA near $2,879.09
Gold remains in a “buy-the-dip” mode, with short-term weakness offset by a broader bullish structure. A breakout above $3,451 would likely reinvigorate bulls, while a break below $3,244 could suggest further consolidation or correction.
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