- Gold eases after a four-day rally with prices stalling below $3,400 as bulls faced key resistance.
- US Treasury yields rise modestly, with the 10-year yield climbing from a three-month low ahead of the debt auction.
- US President Donald Trump revives tariff threats, targets pharma, semiconductors, India and Russia.
Gold (XAU/USD) slips modestly on Wednesday, snapping a four-day winning streak as bulls struggle to extend gains beyond the key $3,400 psychological barrier.
The yellow metal marked a fresh two-week high near $3,391 on Tuesday but has since retreated, last seen trading around $3,366 during European trading hours. A broadly steady US Dollar and subdued Treasury yields are limiting further upside, as the Greenback is holding firm near the lower end of its range established following last week’s Nonfarm Payrolls (NFP) report.
Traders remain on the sidelines, refraining from placing aggressive bets as the market reassesses the Federal Reserve’s (Fed) monetary policy outlook. The latest batch of US economic data has cast doubts over the resilience of the world’s largest economy, reinforcing uncertainty ahead of the September policy decision. Still, the downside in Gold appears limited amid persistent global tariff tensions and firm market expectations that the Fed will lower interest rates next month.
Cautious sentiment also lingers as attention turns to the political shake-up at the Federal Reserve. The resignation of Fed Governor Adriana Kugler, effective August 8, has created a key vacancy on the Board. US President Donald Trump is expected to name her replacement by the end of the week.
Speculation over the potential nominees is fueling concerns that the Fed may tilt toward a looser monetary policy stance, particularly as President Trump has repeatedly stated that, in his view, interest rates should be cut. The move comes at a sensitive time, with markets already pricing in a high probability of a rate cut in September. Any sign of political influence over the Fed could inject fresh volatility into financial markets and reinforce safe-haven demand for Gold.
Market movers: US yields steady, ISM disappoints, Trump ramps up trade threats
- US Treasury yields edge higher on Wednesday, paring recent losses after hitting multi-week lows. The 10-year yield, which dropped to a three-month low on Tuesday, currently trades around 4.236%, up 1.8 basis points on the day. The 30-year yield is also recovering, rising from a one-month low. It opened at 4.729% and is currently hovering near 4.813%, marking a gain of 8.4 basis points so far.
- The uptick in yields reflects a modest shift in sentiment as markets consolidate ahead of $42 billion 10-year note auction on Wednesday, which is expected to offer fresh clues on investor appetite for long-term US debt amid growing fiscal and geopolitical uncertainty.
- The ISM Services PMI for July fell to 50.1, missing expectations of 51.5 and slipping from 50.8 in June, signaling stagnation in the services sector. While the headline reading still indicates marginal expansion, the details were more concerning. The Employment Index dropped deeper into contraction territory at 46.4, down from 47.2, highlighting ongoing labor market weakness. New Orders also declined to 50.3 from 51.3, pointing to fading demand.
- The Prices Paid Index in the ISM Services report rose to 69.9 in July from 67.1, marking its highest level since October 2022. The sharp rise in input costs, despite weakening activity, has reignited inflation concerns and highlighted persistent cost pressures across the services sector. These mixed signals have further clouded the Fed’s monetary policy outlook. According to the CME FedWatch Tool, markets are now assigning an 87% probability of a 25 basis point rate cut in September, with a total of 60 basis points of easing priced in by year-end.
- On the trade front, in an interview with CNBC, President Donald Trump said the tariffs on pharmaceutical imports will start with a modest rate and will go up in one year to 150% and up to 250%. He also confirmed that a separate announcement on semiconductors and chips will be made “in the next week or so.” During the interview, Trump also escalated his threats to impose higher tariffs against India for purchasing Russian Oil, saying he would “very substantially” raise tariffs on India within “the next 24 hours.”
- The Trump administration is also preparing new US sanctions targeting Russia’s secretive Oil tanker network comprising vessels with concealed ownership if President Vladimir Putin fails to agree to a ceasefire in Ukraine by Friday, as reported by the Financial Times.
- Earlier on Tuesday, President Trump confirmed that he was considering four candidates for Fed Chair, including Kevin Hassett and Kevin Warsh, and that Treasury Secretary Scott Bessent was not in the running as he “wants to stay in the Treasury.”
- Looking ahead, with no meaningful US data scheduled for release today, attention turns to remarks from several Fed officials. Fed Governor Lisa Cook and Boston Fed President Susan Collins are set to participate in a panel discussion, while San Francisco Fed President Mary Daly will speak at an economic summit.
Technical analysis: XAU/USD holds above 50-day SMA as momentum stalls near key resistance
Gold (XAU/USD) slips modestly on Wednesday, struggling to sustain momentum after stalling below the key $3,400 psychological barrier. The metal briefly broke below the ascending triangle’s lower trendline last week and found support just above the 100-day Simple Moving Average (SMA) at $3,282.
While the spot prices have since rebounded, the recovery was capped as prices were rejected at the broken triangle support, which is now acting as resistance.
The metal continues to consolidate just above the 50-day SMA near $3,346, which acts as immediate support, followed by the 100-day SMA. If prices break lower, the next targets could be around $3,200 and $3,150.
Momentum indicators remain mixed, reflecting indecision. The Relative Strength Index (RSI) on the daily chart sits at 52, hovering in neutral territory, suggesting neither bulls nor bears are in clear control.
Meanwhile, the Moving Average Convergence Divergence (MACD) indicator is showing early signs of recovery, with a minor bullish crossover and flattening histogram, indicating that bearish pressure may be fading.
A decisive daily close above the $3,390-$3,400 resistance band would invalidate the triangle breakdown and open the door for a potential run toward $3,450, with all-time highs around $3,500 back on the radar.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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