Gold price trades with mild negative bias below multi-week top; bullish bias remains

• Gold price eases from a multi-week top, though the downside potential seems limited.

• Reduced Fed rate cut bets underpin the USD and act as a headwind for the commodity.

• Rising trade tensions should limit any further losses for the safe-haven precious metal.

Gold price (XAU/USD) touches a three-week high, around the $3,374 region, during the Asian session on Monday as new tariff jitters rattle global markets and underpin traditional safe-haven assets. US President Donald Trump announced on Saturday that he will impose 30% levies on products coming from the European Union (EU) and Mexico from August 1. This marks a further escalation of trade wars, which triggers a fresh wave of risk-averse trade and supports the bullion.

However, diminishing odds for an immediate interest rate cut by the Federal Reserve (Fed) assist the US Dollar (USD) to hold steady near its highest level since June 25 and act as a headwind for the non-yielding Gold price. This, in turn, might hold back the XAU/USD bulls from placing aggressive bets and warrants some caution before positioning for any further appreciation. Traders might also opt to wait for the US inflation figures to determine the near-term trajectory for the commodity.

Daily Digest Market Movers: Gold price bulls seem reluctant amid recent USD strength; reduced Fed rate cut bets

The already weaker global risk sentiment takes another hit in reaction to US President Donald Trump's fresh tariff threats on two of the biggest trade partners – Mexico and the European Union. Trump informed European Commission President Ursula von der Leyen and Mexico’s President Claudia Sheinbaum in separate letters on Saturday, adding to a string of over 20 similar tariff notices issued since last Monday.

The latest development tempers investors' appetite for riskier assets, which is evident from a generally weaker tone around the equity markets and might continue to act as a tailwind for the safe-haven Gold price. However, confusing signals over the Federal Reserve's near-term rate-cut path hold back the XAU/USD bulls from placing aggressive bets or building on the recent move up to a multi-week top.

Minutes from the June 17-18 FOMC meeting showed that most policymakers remain worried about the risk of rising inflation on the back of Trump's aggressive trade policies and a still resilient US labor market. Moreover, only a couple of officials felt interest rates could be reduced as soon as this month. This assists the US Dollar to hold steady near a multi-week high and caps the non-yielding yellow metal.

Investors now look to the release of the latest US consumer inflation figures for June on Tuesday, which will be followed by the US Producer Price Index (PPI) on Wednesday. The crucial data, along with speeches from influential FOMC members, would offer more cues about the Fed's policy outlook, amid bets for over 50 basis points worth of easing by December. This, in turn, will drive the USD demand.

In the meantime, persistent uncertainty surrounding the implementation of Trump's erratic trade policies and their impact on the global economy should continue to benefit the traditional safe-haven precious metal.

Gold price seems poised to prolong its recent upward trajectory towards $3,400

From a technical perspective, last week's sustained breakout through the 100-period Simple Moving Average (SMA) on the 4-hour chart and a subsequent move beyond the $3,358-3,360 supply zone was seen as a key trigger for the XAU/USD bulls. This, along with positive oscillators on hourly/daily charts, suggests that the path of least resistance for the Gold price is to the upside. Hence, some follow-through strength, towards reclaiming the $3,400 round-figure mark, looks like a distinct possibility.

On the flip side, the $3,240 horizontal zone now seems to protect the immediate downside and any further slide could be seen as a buying opportunity near the $3,326 region. This should help limit the downside for the Gold price near the $3,300 round figure. This is followed by the $3,283-3,282 region, or over a one-week low touched last Tuesday, which, if broken decisively, would make the XAU/USD pair vulnerable to a further acceleration of the fall towards the July swing low, around the $3,248-3,247 area.