Gold Edges Higher on Trade Tensions, but Fed’s Hawkish Tone Dampens Momentum
Gold Rises on Trade Tensions, but Hawkish Fed Limits Upside
Gold (XAU/USD) is ticking higher on Thursday as escalating global trade tensions renew demand for the precious metal as a traditional safe-haven asset. However, gains remain capped due to persistent hawkish signals from the Federal Reserve and stronger-than-expected U.S. labor market data.
At the time of writing, XAU/USD is trading near $3,325, holding just below triangle resistance after briefly testing the 50-day Simple Moving Average (SMA) at $3,323. Investors remain cautious as they await further developments on tariffs and trade negotiations.
Trump Tariffs Reignite Safe-Haven Demand
The latest boost for gold follows a wave of new tariff announcements from former U.S. President Donald Trump. A 50% tariff on copper imports, effective August 1, was introduced on national security grounds. Brazil was also hit with fresh trade penalties, with Trump citing political interference and digital trade concerns. These actions have triggered renewed safe-haven demand, with investors shifting toward bullion amid rising global uncertainty.
In a statement on Truth Social, Trump added fuel to market anxiety by calling for Federal Reserve Chair Jerome Powell’s resignation, criticizing the Fed’s reluctance to cut rates:
“Rates should have been cut months ago. The only reason they’re not is because Powell doesn’t want me to win.”
Additionally, U.S. officials have sent tariff notices to over 20 countries, including Japan and South Korea, heightening trade friction.
Fed’s Hawkish Tone Caps Gold’s Rally
Despite increased geopolitical risk, gold’s upside is limited by resilient U.S. economic data and a firm Fed policy stance. Initial Jobless Claims fell to 227,000 from the previous week’s 233,000, and Continuing Claims came in at 1.965 million—both beating expectations and reinforcing the strength of the labor market.
These figures, released by the U.S. Department of Labor, further support the Fed’s data-dependent approach. Hawkish remarks from St. Louis Fed President Alberto Musalem and the Fed’s latest meeting minutes highlighted inflation risks tied to tariffs, signaling limited room for near-term rate cuts.
The CME FedWatch Tool shows markets pricing in a 67.4% chance of a 25-bps rate cut by September, though recent data could push that probability lower.
Bond Auction May Influence Yield Curve, Gold Outlook
Attention now turns to the U.S. 30-year bond auction at 17:00 GMT, which could impact long-duration Treasury yields and influence the gold market. Any sharp movements in yields may serve as a near-term catalyst for XAU/USD.
Technical Outlook: Key Resistance and Support Levels in Play
On the daily chart, gold is pausing at a symmetrical triangle resistance, with price action pulling back slightly below the 50-day SMA. Additional resistance is seen at the 20-day SMA at $3,344, while immediate support lies near the $3,300 psychological level and the 38.2% Fibonacci retracement at $3,292.
- Resistance levels: $3,323 (50-day SMA), $3,344 (20-day SMA)
- Support levels: $3,300 (psychological), $3,292 (38.2% Fib)
The Relative Strength Index (RSI) sits near 49, signaling market indecision. A firm break below $3,300 could open the door to additional downside pressure toward the 50% Fibonacci retracement, triggering further technical selling.
