Gold Hovers Near $3,440 as Markets Weigh Trade Optimism and Fed Risk
Fed credibility erosion and unresolved EU tariffs keep gold’s $3,500 breakout in play | That's TraidngNEWS
Gold (XAU/USD) Faces Resistance Near $3,500 as Trade Tensions Ease, But Structural Tailwinds Remain
Fresh Trade Deals Weigh on Gold’s Safe-Haven Demand
Gold (XAU/USD) opened July 23, 2025, at $3,444.30 per ounce, its highest price on record, but momentum began to fade as risk sentiment improved following multiple trade agreements announced by the Trump administration. The latest pact with Japan — involving reciprocal 15% tariffs and broader trade access — has partially resolved global trade friction, prompting a wave of profit-taking in safe-haven assets. Spot gold slipped 0.6% to $3,410.26, while futures retreated to $3,420.90 during midday trading in New York.
Though geopolitical tailwinds helped gold briefly reclaim its April high of $3,500, easing trade-related uncertainty is temporarily diluting its safe-haven appeal. At the same time, investor appetite for risk assets rebounded, especially in equities and Bitcoin, as broader tariff risk appeared to subside — at least with Asia-Pacific partners.
Fed Credibility Under Attack: USD Caught Between Risk and Policy Chaos
The U.S. Dollar Index (DXY) struggled to hold gains, trading near a two-week low at 97.40, despite positive developments on trade. Investors remain cautious amid ongoing political attacks on the Federal Reserve's independence. President Trump continues to demand rate cuts and has publicly criticized Fed Chair Jerome Powell, while Treasury Secretary Scott Bessent’s call for an internal Fed review has intensified uncertainty around U.S. monetary policy.
This environment has capped USD gains, creating conflicting flows in gold. While optimism over trade suppresses immediate demand for XAU/USD, the Fed’s politicization and unclear policy path continue to support longer-term interest in bullion as a hedge against monetary instability.
Strong Technical Structure Anchors Bullish Gold Narrative
The recent breakout above $3,400 was technically significant. Momentum indicators such as the 14-day RSI holding above 60 and price action consolidating within a large symmetrical triangle support the view that gold’s medium-term trend remains upward. The triangle’s resistance line, drawn from the April 22 peak of $3,500, and its ascending base from the May 15 low of $3,120.83, suggest a bullish compression phase nearing resolution.
Traders view the $3,368–$3,370 breakout zone as a new support line, and dips to $3,400 are being bought aggressively. Failure to break and hold above $3,451–$3,452, however, would keep gold trapped within a tightening range. If XAU/USD decisively surpasses $3,500, projected targets could stretch toward $3,550 and even $3,600 — aligned with historical measured moves from past symmetrical triangle breakouts.
Macroeconomic Tensions with EU and Policy Breakdown Feed Long-Term Bull Case
Although tensions with Japan appear resolved, Europe remains a wildcard. President Trump is weighing tariffs between 15% and 20% on EU imports, while EU officials have vowed proportionate retaliation. This unresolved standoff injects fresh risk into the global trade ecosystem. The lack of U.S.-EU and U.S.-India agreements — coupled with rising political volatility — reinforces gold’s relevance as a portfolio hedge.
Moreover, the USD’s 10% YTD decline speaks volumes. The global community’s concern over long-term U.S. fiscal stability, policy reliability, and the dollar’s role as a reserve currency has strengthened the case for de-dollarization, with central banks continuing to increase gold allocations. Institutional flows into bullion remain resilient, even as crypto assets and equities siphon some speculative capital.
Gold’s Momentum Held in Check by Surging Silver and Bitcoin Demand
While gold posted a 43.8% annual gain from $2,395.80 in July 2024 to over $3,439 in July 2025, it is being outpaced by silver, which has rallied 36% YTD, and Bitcoin, which continues to attract capital due to institutional accumulation and fiat skepticism. Silver’s rally is driven by industrial demand, especially from solar and EV sectors, and tightening supply conditions.
The recent surge in ETF silver holdings and sharply higher lease rates for silver metal highlight supply stress. In contrast, gold lacks a strong industrial use case, making it more sensitive to real yields and macro fear. Still, its broader monetary and sovereign demand base underpins its strategic value.
Volatility Awaits as Summer Lulls Mask Breakout Setup
Despite the current choppy trading action — with prices meandering between $3,430–$3,450 — analysts warn that the quiet summer session could be the calm before a storm. Gold is coiled within a narrowing consolidation pattern that often resolves with an explosive directional move. Whether triggered by a Fed misstep, a new trade conflict, or further USD deterioration, the ingredients for a major move are aligning.
A failure to break above $3,500 would likely send XAU/USD back to test support around $3,368, and possibly as low as $3,245. But any decisive move through resistance could unlock an extended rally toward $3,700, as suggested by Goldman Sachs Research, which forecast a 40% price gain in 2025 based on gold’s January open of $2,633.
Final Assessment: XAU/USD Positioning Tilted Bullish — But Needs Confirmation Above $3,500
Gold’s structural uptrend remains intact, supported by political instability, a weakening dollar, and central bank accumulation. However, recent trade optimism and stronger risk sentiment have stalled momentum. Technical compression near record highs points to an imminent breakout, but directionality will hinge on macro headlines and the Fed’s next moves.
Verdict: XAU/USD is a conditional BUY, but only if the $3,500 resistance is breached and confirmed with volume. Otherwise, traders should accumulate on dips near $3,400, with a stop under $3,368, and prepare for volatility as policy risk and global trade tensions resurface.
