The gold price (XAU/USD) continues to exhibit a positive bias, extending its modest recovery for the second consecutive session. On Thursday, the precious metal climbed further from the one-and-a-half-week low near the $3,282-$3,283 range touched earlier in the week, holding steady above the psychologically critical $3,300 level.
However, despite the upward momentum, the bullish conviction among market participants remains cautious due to mixed economic signals and policy uncertainties. Fimatron provides a well-structured exploration of this matter through its knowledgeable brokers.
Safe-Haven Demand Boosts XAU/USD Amid Trade Jitters
One of the key drivers supporting the gold price is the renewed demand for safe-haven assets. Investor anxiety was stoked by the US President’s announcement of fresh tariffs targeting eight minor trading partners, accompanied by the message that no extensions will be granted.
The administration also confirmed a 50% tariff on copper imports, effective August 1. These aggressive trade actions have amplified geopolitical risk and economic uncertainty, fueling risk-off sentiment and boosting flows into gold, which traditionally acts as a store of value during market turmoil.
US Dollar Weakness and Declining Bond Yields Support Gold
Another important pillar underpinning gold’s rise is the retreat of the US Dollar (USD). After touching a two-week high on Tuesday, the USD Index (DXY) has slipped for two straight sessions. This pullback is largely due to falling US Treasury yields, especially after a strong 10-year government bond auction that indicated robust investor appetite and expectations for future monetary easing.
The non-yielding nature of gold becomes more attractive in a low-interest-rate environment, as the opportunity cost of holding bullion decreases. Recent Fed commentary, combined with the June FOMC minutes, suggests that most officials are inclined toward rate cuts later in 2025, although only a few policymakers currently support immediate action.
These nuances create speculative tailwinds for gold while also imposing technical resistance barriers that curb excessive upside enthusiasm.
Mixed Fed Signals Create Tactical Uncertainty
While rate cut expectations continue to buoy gold, the labor market resilience is complicating the narrative. Stronger-than-expected US employment data, released last Thursday, showed that the economy added more jobs than anticipated in June. This data point led some traders to scale back aggressive bets on near-term rate reductions.
The June FOMC meeting minutes, released Wednesday, highlighted a divergence within the Federal Reserve. While most members viewed inflation risks from trade policy as transitory, only a couple advocated for immediate rate easing.
This split view clouds the short-term outlook for interest rates and introduces policy ambiguity, which in turn limits bullish momentum in the gold market despite supportive macro fundamentals.
Technical Outlook: Bulls Need a Break Above Key Resistance
From a technical analysis standpoint, the XAU/USD pair faces an uphill battle to confirm a bullish breakout. The 100-period Simple Moving Average (SMA) on the 4-hour chart, currently near the $3,335 region, represents the first major resistance level.
A sustained move above this hurdle could open the door toward the $3,358-$3,360 supply zone. Breaking through this resistance cluster might prompt short-covering activity, potentially propelling gold back toward the $3,400 psychological level.
Conversely, failure to defend the $3,300 support could expose gold to renewed selling pressure, dragging prices back toward the overnight swing low near $3,283-$3,282. A deeper correction could see the metal testing the July monthly low around $3,247-$3,248, thus nullifying the near-term positive bias.
Market Focus: Data Releases and Fed Speeches
Looking ahead, traders are closely watching the US Weekly Jobless Claims report for additional labor market clues. Also on the radar are scheduled speeches by key Federal Reserve officials, which may offer fresh insights into the future path of interest rates.
Any dovish tilt in rhetoric may reignite speculative demand for gold, while hawkish surprises could restrain the metal’s upward trajectory.
Conclusion: Cautious Optimism Prevails
In summary, gold is trading with a positive short-term bias above $3,300, supported by trade tensions, falling yields, and softening dollar sentiment. However, the lack of bullish conviction, driven by conflicting Fed signals and robust labor data, continues to limit upside follow-through.
For a stronger bullish confirmation, a decisive break above the $3,335-$3,360 resistance zone is essential. Until then, the XAU/USD pair remains vulnerable to event-driven volatility and technical reversals, making tactical positioning crucial for market participants.
As the macroeconomic backdrop evolves, the interplay between monetary policy expectations, trade dynamics, and safe-haven demand will remain key in shaping the gold price trajectory through the third quarter of 2025.
