Gold (XAU/USD) opened the new trading week on a softer note, retreating from a more than two-week high set on Friday. However, the pullback has been shallow, lacking conviction from sellers. Market dynamics remain mixed as optimism surrounding U.S.-EU trade relations weighs on safe-haven demand, while underlying geopolitical and fiscal risks continue to support gold.
Tariff Delay Tempers Safe-Haven Demand
The easing of geopolitical trade tensions has curbed near-term demand for gold. Over the weekend, U.S. President Donald Trump announced a delay in imposing 50% tariffs on all European Union imports. This decision follows what he described as a “very good call” with European Commission President Ursula von der Leyen. The move to suspend tariffs until July 9 aims to provide a window for negotiating a broader trade agreement.
The development has temporarily reduced risk-off sentiment in global markets, leading to a weaker start for the traditionally defensive gold asset.
Underlying Risks Continue to Support Bullish Bias
Despite the tariff reprieve, gold’s downside remains limited due to persistent concerns:
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The U.S. fiscal position continues to deteriorate, raising alarms over debt sustainability and macroeconomic stability.
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Ongoing geopolitical instability — particularly the prolonged Russia-Ukraine war and intensifying conflict in the Middle East — continues to fuel uncertainty, providing underlying support for gold.
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Expectations for Federal Reserve interest rate cuts in the coming months have pressured the U.S. dollar to fresh monthly lows, further cushioning gold’s retreat.
This macro backdrop has prevented aggressive short positions and supports the view that gold remains fundamentally underpinned.
Technical Outlook: Positive Trend Still Intact
Technically, gold prices are trending along an ascending trendline, reinforcing the near-term bullish structure. Momentum indicators on both the hourly and daily timeframes suggest continued buying interest:
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Immediate support lies around $3,325–3,324, aligned with the trendline.
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A break below this zone could invite technical selling, dragging gold toward the $3,300 round number and further to $3,283 — where the 200-period simple moving average (SMA) on the 4-hour chart resides.
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The $3,283 SMA should act as a critical support level. A sustained move below would signal a shift in momentum and open the door for deeper declines.
On the upside:
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A breakout above Friday’s high near $3,366 would signal renewed bullish intent and pave the way for a move toward the $3,400 psychological level.
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Further strength could target resistance at $3,430, followed by a retest of the all-time high around $3,500 reached in April.
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Beyond $3,500, traders should watch the $3,465–3,470 range for potential medium-term resistance.
Risk-On Mood Pressures Gold, But Underlying Tailwinds Remain
While the immediate tone for gold has softened due to improved risk sentiment stemming from U.S.-EU trade negotiations, the metal’s longer-term outlook remains favorable. Safe-haven appeal continues to be underpinned by geopolitical instability and concerns over the U.S. fiscal outlook.
Additionally, a weakening dollar on expectations of monetary easing by the Fed lends further support to non-yielding assets like gold. Investors are advised to monitor price behavior around key technical levels — particularly the $3,324 trendline support and $3,366 resistance — for clues on the next directional move.
Gold remains caught in a tug-of-war between macro optimism and entrenched structural concerns. Until a decisive technical breakout occurs, choppy consolidation may prevail.
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