Key Catalysts Influencing Gold Prices

• U.S. Dollar Rebound: A slight resurgence in the U.S. dollar is exerting downward pressure on gold, as the two often move inversely.
• Federal Reserve Policy: Anticipation of future interest rate cuts by the Federal Reserve is providing underlying support for gold.
• Geopolitical Risks: Ongoing tensions, including those between the U.S. and China, and the Russia-Ukraine conflict, are bolstering gold’s safe-haven appeal.

The USD and Fed Rate Cut Expectations

Investors are largely anticipating that the Federal Reserve will implement further interest rate cuts, especially given recent signs of easing inflation in the U.S.This expectation is capping the U.S. dollar’s strength and, consequently, supporting gold prices, which do not offer a yield.

Adding to the complexity, concerns about the U.S. fiscal situation, coupled with ongoing geopolitical risks and escalating U.S.-China trade tensions, are further limiting potential losses for gold.

Geopolitical Tensions and Trade Uncertainties

Rising geopolitical tensions and trade-related uncertainties are meaningful factors supporting gold prices. U.S. President donald Trump lashed out at China over the weekend and accused the latter of violating a preliminary tariff agreement, reviving fears of a trade war between the world’s two largest economies. This statement underscores the fragility of trade relations and their potential impact on market sentiment.

Moreover,the Trump administration is reportedly urging countries to present their most favorable trade proposals by Wednesday in an effort to speed up discussions before reciprocal tariffs come into effect on July 8. These developments highlight the urgency and potential for further trade-related volatility.

The Russia-Ukraine Conflict

The ongoing conflict between Russia and Ukraine continues to fuel uncertainty. A second round of direct peace talks between Ukrainian and Russian delegations in Istanbul on Monday ended without a major breakthrough. This lack of progress, combined with continued military actions, sustains a risk-averse environment that benefits gold.

Ukrainian President Volodymyr Zelenskyy’s statement that the surprise drone attacks over the weekend were a success and that it will continue if Russia doesn’t halt its offensive further illustrates the heightened tensions and potential for escalation.

Federal Reserve’s Stance on Interest Rates

Market participants are closely watching the federal Reserve for signals regarding future monetary policy. The expectation of at least two 25 basis points interest rate cuts by the Federal Reserve in 2025 is a key factor limiting losses for gold.

Recent comments from Fed officials provide some clarity on the outlook for interest rate cuts. Fed Governor Christopher Waller stated that rate cuts remain possible later this year even with the Trump administration’s tariffs likely to push up price pressures temporarily.

Chicago Fed President Austan Goolsbee noted that interest rates can come down over 12-18 months. However, Dallas Fed President Lorie Logan struck a more cautious tone, saying that the policy is well positioned to wait and be patient, and the risk is if higher short-term inflation expectations become entrenched.

upcoming Economic Data and Market Focus

Traders are now focusing on the release of the U.S.JOLTS Job Openings data, which, along with speeches by influential FOMC members, will likely influence the U.S. dollar and gold prices. However, the primary focus remains on the U.S. monthly employment details, particularly the Nonfarm Payrolls (NFP) report due Friday.

Technical Analysis: Key Levels to Watch

From a technical standpoint,the breakout through the $3,324-$3,326 hurdle and subsequent strength beyond $3,355 was a key trigger for gold bulls. Oscillators on daily and hourly charts are holding in positive territory, suggesting that the path of least resistance for gold is to the upside.

• Support Levels: Any subsequent slide below $3,355 could be seen as a buying possibility, with support expected near $3,326-$3,324. Further selling could lead to testing the $3,286-$3,285 horizontal support.
• resistance Levels: Bulls might target a move beyond the $3,400 level, positioning for a move toward the next resistance near $3,430-$3,432. A sustained strength beyond this level could allow gold to retest its all-time peak and perhaps reach the $3,500 mark.