Gold (XAU/USD) remains under pressure at the start of the week, weighed down by improved market sentiment following former U.S. President Donald Trump’s decision to delay tariffs on the European Union. However, persistent economic concerns and geopolitical tensions continue to offer underlying support for the precious metal.
Gold prices retreated from a two-week high reached on Friday, as investor appetite for safe-haven assets weakened. The move followed Trump’s unexpected delay of a 50% tariff on EU imports, now pushed from June 1 to July 9. The delay helped boost risk sentiment, drawing investors away from traditional safety plays like gold.
Despite the decline, several factors continue to support the yellow metal. Market participants remain cautious amid escalating concerns about U.S. fiscal stability. A sweeping tax cut and spending package, estimated to add $4 trillion to the federal deficit over the next decade, passed the House last week and now awaits a Senate vote. The bill has intensified fears over the rapid deterioration of U.S. public finances.
Additionally, weakening economic indicators are shifting expectations for U.S. monetary policy. Softer-than-anticipated inflation data — both Consumer Price Index (CPI) and Producer Price Index (PPI) — combined with a sluggish growth outlook, have strengthened market bets on interest rate cuts. Traders now anticipate at least two 25-basis-point rate cuts from the Federal Reserve before the end of 2025.
The resulting decline in U.S. Dollar strength has also benefited gold, which is priced in the greenback. The USD fell to its lowest level in over a month on Monday, extending a two-week slide.
Minneapolis Federal Reserve President Neel Kashkari added to the cautious tone, warning that prolonged tariffs could increase the risk of stagflation. “The question now is the scale of stagflation,” Kashkari noted on Monday.
Geopolitical Tensions Lend Support
Geopolitical developments are also playing a role in shaping gold’s near-term trajectory. Over the weekend, Russia launched its largest aerial assault on Ukraine since the conflict began, involving extensive missile and drone strikes across multiple cities. Trump condemned the attack and suggested that new sanctions against Moscow were under consideration.
Meanwhile, continued Israeli airstrikes on Gaza have kept Middle East tensions high, adding another layer of uncertainty that supports demand for safe-haven assets like gold.
Focus Turns to Fed Minutes and Key U.S. Data
Looking ahead, markets will closely watch the Federal Open Market Committee (FOMC) minutes, scheduled for release on Wednesday, for additional clues on the Fed’s rate-cut trajectory. Key U.S. economic data will also be in focus this week, including Durable Goods Orders (Wednesday), Preliminary GDP (Thursday), and the Personal Consumption Expenditures (PCE) Price Index (Friday), the Fed’s preferred inflation gauge.
Technical Outlook: Pullback May Offer Buying Opportunity
From a technical standpoint, gold is showing resilience along an ascending trendline. Positive momentum indicators on both hourly and daily charts support a short-term bullish bias. Analysts see potential buying interest near the $3,325–$3,324 support region. A decisive break below this level could trigger further downside, with the next key support near $3,300, followed by the $3,283 level — aligned with the 200-period Simple Moving Average on the 4-hour chart.
On the upside, a move above Friday’s swing high near $3,366 could encourage renewed buying and open the door for a climb toward the psychological $3,400 level. Further resistance lies near $3,430, with a break above potentially setting the stage for a retest of the all-time high around $3,500, last seen in April. Intermediate resistance is expected between $3,465 and $3,470.
