Gold price (XAU/USD) edges higher heading into the European session on Tuesday and looks to move away from a three-week low, around the $3,300 mark touched the previous day. As investors digest the latest trade optimism, the market anxiety ahead of this week’s key central bank events and important US macro data offers some support to the safe-haven precious metal. However, a combination of factors might hold back traders from placing aggressive bullish bets around the commodity.
The US Dollar (USD) buying interest remains unabated in the wake of the growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer. This, in turn, could act as a headwind for the non-yielding Gold price. Traders might also opt to wait for more cues about the Fed’s rate-cut path before positioning for the next leg of directional move for the XAU/USD pair. Hence, the focus will remain glued to the outcome of a two-day FOMC policy meeting on Wednesday.
Market Drivers:
-
US-EU Trade Deal Boosts Risk Appetite:
A framework trade agreement between the US and European Union over the weekend, following a similar US-Japan deal, has eased global trade tensions. Additionally, top-level trade talks between the US and China are set to resume today, with Treasury Secretary Scott Bessent and China’s Vice Premier He Lifeng aiming to extend the trade truce for another three months. -
USD Surge Pressures Gold:
The US Dollar surged on Monday, marking its largest daily gain since May and putting it on track for a 1.5% rise in July—its first monthly gain of the year. This weighed heavily on gold, dragging prices down for a fourth straight session. However, USD bulls have paused ahead of fresh signals from the Fed regarding interest rate outlook. -
FOMC in Focus:
The two-day FOMC policy meeting begins Tuesday, with the Fed expected to keep rates unchanged. Markets will closely watch the post-meeting statement and Chair Jerome Powell’s remarks for insights into the future rate-cut path and economic assessment. -
Geopolitical Risk Still Lingers:
President Donald Trump issued a new 10–12 day deadline for Russia to show progress in ending the war in Ukraine. He threatened severe sanctions and 100% secondary tariffs on countries importing Russian goods, keeping geopolitical risks alive and lending some support to gold’s safe-haven appeal. -
Key US Data Ahead:
Traders are also eyeing today’s US economic calendar, featuring JOLTS Job Openings and the Conference Board’s Consumer Confidence Index. These releases could influence USD sentiment and generate fresh momentum for gold in the short term.
