Gold prices (XAU/USD) showed signs of recovery during Thursday’s Asian session, regaining part of the previous day’s losses and hovering around the $3,362–$3,363 range, near this week’s low. Persistent trade uncertainties and escalating geopolitical tensions in the Middle East continue to fuel a cautious market environment, supporting gold’s appeal as a safe-haven asset.
On Wednesday, the U.S. Federal Reserve kept interest rates unchanged after a two-day meeting but signaled a more cautious approach to future rate cuts. Concerns over potential inflationary pressure from President Donald Trump’s tariffs contributed to this hawkish stance. As a result, the U.S. dollar strengthened to a one-week high, limiting gold’s rally below the key $3,400 level and signaling caution for bullish investors.
In other developments, President Trump convened a Situation Room meeting to evaluate military options amid the ongoing Israel-Iran conflict. Reports suggest that while attack plans on Iran have been approved, Trump remains cautious to avoid a prolonged Middle Eastern war. Meanwhile, the Israel Defense Forces have urged residents in central Iranian cities Arak and Khondab to evacuate, escalating fears of a broader conflict and weighing on investor confidence.
Adding to market uncertainty, Trump announced upcoming tariffs on the pharmaceutical sector, which are expected to take effect before the July 9 deadline for reciprocal tariff increases. This uncertainty bolsters gold’s safe-haven status, although the stronger U.S. dollar restricts significant gains.
The Fed’s decision to hold rates steady met expectations but highlighted shifting sentiment among policymakers. Their dot plot forecasted two rate cuts by the end of 2025, followed by one 25-basis-point cut each in 2026 and 2027. Notably, seven of the 19 officials now oppose any cuts this year, up from four in March, due to persistent inflation risks projected to end the year near 3%. This outlook supports the dollar’s recent recovery from a three-year low while capping upside momentum for gold.
With U.S. banks closed Thursday for Juneteenth National Independence Day and no major economic data scheduled, liquidity is expected to be thin, leaving gold largely influenced by dollar moves and overall market sentiment.
Technically, gold is trading within an ascending channel that indicates a solid short-term uptrend, favoring buyers. Positive momentum indicators on the daily chart suggest any dips are likely to find support near $3,345, the channel’s lower boundary. However, a decisive break below this level could undermine the near-term bullish outlook and risk extending the week’s retracement from recent highs.
On the upside, the $3,400 mark remains a strong resistance level. Surpassing it could push gold toward the $3,434–$3,435 zone. Further gains above $3,451–$3,452—the near two-month peak reached earlier this week—might set the stage for a challenge of the all-time high near the $3,500 psychological barrier. This level also aligns with the upper boundary of the ascending channel, and breaking through it would likely trigger renewed buying interest among bulls.
