Gold price faces rejection near $3,400 amid some USD buying; lacks follow-through

FXStreet
Updated
Mitrade
coverImg
Source: DepositPhotos

  • Gold price struggles to capitalize on an Asian session move above the $3,400 mark.

  • A modest USD strength turns out to be a key factor that undermines the XAU/USD pair.

  • Geopolitical risks and Fed rate cut bets act as a tailwind for the non-yielding commodity.

Gold price (XAU/USD) attracts fresh sellers following an Asian session uptick to levels just above the $3,400 mark and turns lower for the second straight day on Tuesday. A modest US Dollar (USD) uptick is seen as a key factor acting as a headwind for the commodity. The downside, however, seems limited amid rising geopolitical tensions in the Middle East and bets that the Federal Reserve (Fed) will cut interest rates further in 2025.

Meanwhile, an aerial war between Israel and Iran enters its fifth day, raising the risk of a broader regional conflict in the Middle East. This keeps the geopolitical risk premium in play and should contribute to limiting losses for the safe-haven Gold price. Traders might also opt to wait for the outcome of a two-day FOMC policy meeting on Wednesday before placing fresh directional bets around the non-yielding yellow metal.

Daily Digest Market Movers: Gold price bulls seem reluctant amid modest USD uptick; downside seems cushioned

  • Israel struck Iran’s state-run television station on Monday, while Iran said that it is preparing for the largest and the most intense missile attack in history on Israeli soil. US President Donald Trump left the G7 Summit a day early because of the Middle East situation and has requested the National Security Council to convene in the Situation Room.

  • Three tankers are reportedly on fire in the Gulf of Oman near the Strait of Hormuz, raising concerns of a possible repeat of the 2019 attacks attributed to Iran. This raises the risk of a further escalation of geopolitical tensions in the Middle East and assists the safe-haven Gold price to gain some positive traction during the Asian session on Tuesday.

  • The US Dollar edges higher amid repositioning trades ahead of the crucial two-day FOMC policy meeting starting later today and acts as a headwind for the precious metal. The Federal Reserve is widely expected to maintain the status quo and keep its benchmark rate unchanged amid concern that Trump's tariffs could push up consumer prices.

  • Meanwhile, the USD uptick lacks bullish conviction on the back of rising bets that the Fed will resume its rate-cutting cycle in September. Hence, the accompanying policy statement and Fed Chair Jerome Powell's comments during the post-meeting press conference will be scrutinized closely for cues about the future rate-cut path.

  • This, in turn, will help in determining the next leg of a directional move for the USD and the non-yielding yellow metal. In the meantime, persistent trade-related uncertainties and geopolitical risks stemming from the worsening Iran-Israel conflict might continue to act as a tailwind for the safe-haven commodity.

Gold price is more likely to attract dip-buyers  near the lower ascending channel boundary

From a technical perspective, the formation of an ascending channel points to a well-established short-term uptrend. Adding to this, positive oscillators on the daily chart back the case for the emergence of dip-buying, which should help limit the downside for the Gold price near the $3,340-3,335 area, or the lower boundary of the trend channel. A convincing break below the latter would negate any near-term positive outlook and shift the bias in favor of bearish traders.

On the flip side, the $3,400 round figure now seems to have emerged as an immediate hurdle, above which the Gold price could climb to the $3,434-3,435 region. Some follow-through buying, leading to a subsequent strength beyond the $3,451-3,452 area, or the multi-week top touched on Monday, should allow the Gold price to challenge the all-time peak, around the $3,500 psychological mark touched in April. The said handle coincides with the ascending channel barrier, which if cleared would pave the way for a further appreciating move.

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

goTop
quote
Do you find this article useful?
Related Articles
placeholder
Asian Stocks Pull Back from Peaks as Dollar Gains Momentum Before Critical Week Asian shares saw a decline on Friday, with Japanese markets stepping back from record highs as investors opted to secure profits. This comes ahead of a pivotal week that includes U.S. President Donald Trump’s tariff deadline and multiple central bank meetings. The dollar strengthened against the yen after recovering from a two-week low, buoyed by positive U.S. economic data.
Author  Mitrade
7 Month 25 Day Fri
Asian shares saw a decline on Friday, with Japanese markets stepping back from record highs as investors opted to secure profits. This comes ahead of a pivotal week that includes U.S. President Donald Trump’s tariff deadline and multiple central bank meetings. The dollar strengthened against the yen after recovering from a two-week low, buoyed by positive U.S. economic data.
placeholder
Asian Stocks and AUD Rise on Trade and Earnings Boost Stocks across Asia rose on Thursday, with the Australian dollar reaching an eight-month high, buoyed by optimism surrounding corporate earnings and ongoing trade negotiations.
Author  Mitrade
7 Month 24 Day Thu
Stocks across Asia rose on Thursday, with the Australian dollar reaching an eight-month high, buoyed by optimism surrounding corporate earnings and ongoing trade negotiations.
placeholder
Gold price remains below $3,400, potential upside on trade-related anxietyGold price (XAU/USD) edges lower on Tuesday after two days of gains. However, the price of the safe-haven metal may appreciate due to prevailing uncertainty ahead of US President Donald Trump's August 1 tariff deadline.
Author  FXStreet
7 Month 22 Day Tue
Gold price (XAU/USD) edges lower on Tuesday after two days of gains. However, the price of the safe-haven metal may appreciate due to prevailing uncertainty ahead of US President Donald Trump's August 1 tariff deadline.
placeholder
Gold price extends range play amid mixed Fed rate cut cues; downside seems limitedGold price (XAU/USD) struggles to capitalize on the overnight bounce from the $3,309 area, or a one-week low, and oscillates in a narrow trading band during the Asian session on Friday.
Author  FXStreet
7 Month 18 Day Fri
Gold price (XAU/USD) struggles to capitalize on the overnight bounce from the $3,309 area, or a one-week low, and oscillates in a narrow trading band during the Asian session on Friday.
placeholder
Gold price retreats further from multi-week high touched on WednesdayGold price (XAU/USD) drifts lower during the Asian session on Thursday and moves further away from a three-week top, around the $3,377 area touched the previous day. US President Donald Trump denied reports that he is planning to fire Federal Reserve (Fed) Chair Jerome Powell.
Author  FXStreet
7 Month 17 Day Thu
Gold price (XAU/USD) drifts lower during the Asian session on Thursday and moves further away from a three-week top, around the $3,377 area touched the previous day. US President Donald Trump denied reports that he is planning to fire Federal Reserve (Fed) Chair Jerome Powell.
Real-time Quote