Gold price (XAU/USD) retains intraday bearish bias through the first half of the European session, though it manages to bounce off the $3,300 mark, or a one-week low touched this Monday. A goodish pickup in the US Dollar (USD) demand turns out to be a key factor driving flows away from the commodity. However, the growing acceptance that the US Federal Reserve (Fed) will lower borrowing costs further this year might hold back the USD bulls from placing aggressive bets and lend some support to the non-yielding yellow metal.
Furthermore, concerns that US President Donald Trump’s massive tax-cut and spending bill would worsen America’s long-term debt problems might contribute to capping gains for the USD. Meanwhile, the market sentiment remains fragile on the back of the uncertainty surrounding US President Donald Trump’s erratic trade policies. Apart from this, fresh Israeli strikes on Yemen in almost a month temper investors’ appetite for riskier assets, which further helps limit the downside for the safe-haven Gold price and warrants caution for bears.
Daily Digest Market Movers: Gold price continues to be weighed down by notable USD strength
The US Dollar kicks off the new week on a slightly positive note and weighs on the Gold price, though the downside potential seems limited amid a combination of supporting factors.
US President Donald Trump’s ‘One Big Beautiful Bill’ is now a law and is expected to add $3.4 trillion to the nation’s debt over the next decade, worsening the long-term debt problem.
This comes amid worries about the potential economic fallout from Trump’s reciprocal tariffs and dovish Federal Reserve bets, which should keep a lid on any meaningful USD strength.
Trump said on his social media early this Monday that the US tariff letters, and/or deals, with various countries from around the world, will be delivered starting 12:00 P.M. on July 7th.
Trump followed up with a warning, stating that any country aligning with the anti-American policies of BRICS will be charged an additional 10% tariff and there will be no exceptions to this policy.
Traders are currently pricing in over a 70% chance that the US central bank would lower borrowing costs in September and deliver at least two 25 basis points rate reductions by the year-end.
The Israeli military carried out intense strikes on Houthi targets in three Yemeni ports and a power plant early this Monday in response to repeated attacks by the Iran-aligned group on Israel.
This keeps geopolitical risks in play and should offer some support to the safe-haven precious metal. Traders now look to the release of FOMC minutes on Wednesday for a fresh impetus.
Gold price bears await sustained break below $3,300 mark before positioning for deeper losses
The recent repeated failures to build on momentum beyond the 100-period Simple Moving Average (SMA) on the 4-hour chart and the subsequent fall below the $3,300 mark will be seen as a fresh trigger for the XAU/USD bears. Given that oscillators on the daily chart have just started gaining negative traction, the Gold price might then accelerate the slide to the next relevant support near the $3,270 horizontal zone en route to the $3,248-3,248 region.
On the flip side, the $3,324-3,325 region now seems to act as an immediate hurdle ahead of the $3,342-3,343 zone. Some follow-through buying, leading to a further strength beyond the $3,352-3,355 area, could provide a goodish lift to the Gold price and allow bulls to aim towards reclaiming the $3,400 round figure.
