Gold (XAU/USD) prices have been facing sustained downward pressure in recent sessions, as the commodity reacts to shifting market dynamics. A U.S. federal court’s recent decision to block the Trump-era “Liberation Day” tariffs has boosted investor confidence and triggered a broad risk-on sentiment, weighing heavily on gold’s appeal as a safe-haven asset.
This favorable mood in global markets was further reinforced by hawkish minutes from the Federal Reserve’s latest FOMC meeting, which supported the U.S. dollar and equity markets. As the greenback gained strength, gold prices slipped, with traders rotating into riskier assets amid improved economic sentiment.
Dollar Strength and Tariff Ruling Hurt Gold Prices
The U.S. court ruling has been interpreted as a rollback of protectionist trade policy, lifting investor optimism. As a result, equities rallied and gold lost some of its traditional allure. The court emphasized that Congress holds exclusive rights to regulate foreign commerce, casting doubt on the legitimacy of unilateral executive actions like Trump’s proposed tariffs.
Meanwhile, the Federal Reserve’s meeting minutes showed strong consensus among policymakers to keep interest rates on hold while carefully assessing incoming economic data. This patient but firm stance helped push the U.S. dollar higher. A stronger dollar makes gold more expensive for foreign buyers, reducing global demand.
Adding to the bearish tone, recent U.S. economic data exceeded expectations, easing fears of a slowdown and encouraging investors to shift away from safe-haven assets like bullion.
Uncertainty Persists Despite Bearish Pressure
Despite the overall weakness in gold, some undercurrents continue to provide support. Reports that the U.S. may impose fresh tech export restrictions on China have reignited concerns over escalating trade tensions. If tensions worsen, gold could regain some of its lost appeal.
Additionally, Russia’s unexpected proposal for peace negotiations with Ukraine has introduced a new geopolitical variable. If successful, such talks could reduce global risk perception and further pressure gold. However, until clear outcomes emerge, many investors remain cautious and reluctant to fully exit safe-haven positions.
Technical Analysis: Key Breakout Level in Focus
From a technical standpoint, gold continues to trade within a well-defined ascending channel that began in late 2024. This broader bullish structure remains intact, even as the metal faces short-term selling pressure.
A series of triangle patterns within this channel previously acted as bullish continuation setups, with price breakouts leading to sharp rallies. At present, gold is testing the lower boundary of this channel, which also coincides with support from a descending triangle pattern.
Recent price action shows resistance near $3,300, with sellers defending this level aggressively. Should gold break below the triangle support and channel base, it may open the door for a deeper correction, with the next major support zone seen around $3,200.
On the flip side, if bulls successfully defend the lower boundary, a rebound could target the $3,400 level once again. Volume and momentum indicators have weakened since April, signaling consolidation. Any breakout—up or down—could lead to the next directional push.
Conclusion
Gold is caught in a delicate balance between improving risk sentiment and lingering global uncertainty. While the U.S. court ruling and strong dollar have triggered selling, ongoing trade and geopolitical tensions are preventing a full-blown collapse in prices.
Technically, gold remains at a key inflection point. A breakdown below current support levels could result in deeper losses, while a successful defense may reignite bullish momentum. Investors and traders alike should watch closely for upcoming economic data, trade headlines, and geopolitical developments to gauge the next significant move in gold.
