Gold prices remain rangebound as bulls fail to breach $3,400 resistance; Fed reshuffle and Trump’s tariff threats stir market uncertainty.
Gold Pares Gains After Four-Day Rally
Gold (XAU/USD) eased slightly on Wednesday after a four-day bullish run, failing to cross the psychological resistance level of $3,400. Prices rebounded from an intraday low of $3,358 and climbed to $3,374 during U.S. trading hours, supported by a softer U.S. Dollar and steady Treasury yields. However, upside momentum remains capped as traders remain cautious.
Key Highlights:
- Gold price today: Trades around $3,374 per ounce
- Resistance zone: Strong supply seen near $3,400
- Support level: Holding above $3,350 on the downside
- US Dollar Index (DXY): Weakens, supporting XAU/USD
- US 10-year yield: Rises modestly ahead of debt auction
Weak Dollar and Fed Uncertainty Fuel Gold Support
A slightly weaker U.S. Dollar has lent support to gold prices, making the yellow metal more attractive for foreign buyers. At the same time, a political shake-up at the Federal Reserve is adding a layer of market uncertainty. The resignation of Fed Governor Adriana Kugler, effective August 8, has sparked speculation over a potentially dovish replacement.
Impact of Fed Vacancy:
- Trump expected to appoint Kugler’s successor by week’s end
- Market fears increased political influence on Fed policy
- Could tilt central bank toward rate cuts before the U.S. election
With markets already pricing in a 91% probability of a rate cut in September, any signs of further political pressure on the Fed could spur safe-haven demand for gold.
Trump’s Tariff Threats Revive Safe-Haven Appeal
Adding to the geopolitical tensions, U.S. President Donald Trump has once again ramped up his trade war rhetoric. In his latest remarks, Trump threatened new tariffs targeting the pharmaceutical, semiconductor industries, as well as countries like India and Russia.
Market Reaction to Tariff Risks:
- Raises concerns about global supply chain disruptions
- Fuels safe-haven demand for gold
- Increases uncertainty in equities and commodities
The timing of Trump’s announcement—just ahead of the debt auction and amid ongoing inflation debates—raises the stakes for financial markets, which are already on edge.
Fed’s Kashkari Adds to Dovish Chorus
Minneapolis Fed President Neel Kashkari added fuel to gold’s support by making dovish comments during a CNBC interview. He stated that:
- The U.S. economy is slowing
- The labor market is showing signs of cooling
- Two rate cuts in 2025 seem appropriate
- The impact of new tariffs on inflation remains uncertain
Such remarks align with other recent Federal Reserve statements, reinforcing expectations of monetary easing in the coming months, which is historically positive for gold.
Technical Analysis: Gold Holds Key Moving Average Support
From a technical standpoint, gold prices are hovering above the 50-day Simple Moving Average (SMA), indicating that bulls still retain some control. However, multiple attempts to breach the $3,400 resistance have failed, suggesting that a breakout is required for further upside momentum.
XAU/USD Technical Outlook:
- Resistance: $3,400, followed by $3,415 and $3,440
- Support: $3,358, then $3,340 and $3,312
- Indicators: RSI near neutral; MACD showing fading bullish momentum
Unless gold breaks convincingly above $3,400, it may continue to trade within a sideways range.
Broader Market Sentiment: Risk-Off Caution Dominates
Investors are currently navigating a complex environment marked by:
- Rising geopolitical tensions
- Uncertainty about U.S. monetary policy direction
- Mixed U.S. economic data, including a weak ISM Services PMI reading
These factors have created a risk-off tone in the markets, generally favorable to safe-haven assets like gold, but also limiting aggressive buying due to uncertainty.
Key Factors Driving Gold Price in Coming Days
1. Fed Nominee Announcement
- A dovish replacement for Kugler may solidify September rate cut bets
2. September Rate Cut Expectations
- Current probability of a cut is above 90%
- Gold historically benefits from lower interest rates
3. U.S. Dollar and Bond Yields
- Any sharp movement in the USD or 10-year yields could trigger gold volatility
4. Tariff Policy Escalation
- Watch for follow-through action on Trump’s threats, especially toward India and pharma
5. Technical Breakout Levels
- Sustained break above $3,400 could attract momentum buying
Conclusion: Gold Rangebound But Bullish Underpinnings Remain
While gold prices are currently rangebound, underlying macroeconomic and geopolitical conditions continue to favor the bullish case. With:
- September Fed rate cuts likely
- Political tension at the Fed
- Tariff risks re-emerging
- And a weaker dollar backdrop
…the outlook for gold remains constructive in the medium term, especially if bulls manage to decisively break the $3,400 resistance level.
