Gold prices have fallen because of expectations for trade agreements before new tariffs start on August 1. Prices dipped below $3,300, approaching support at $3,280. Recent tariff announcements from the US President – including 25% on Japan and 30% on South Korea – have led to a temporary drop in gold demand, while boosting demand for the US Dollar. The FOMC Meeting Minutes, set to be released on Wednesday, may provide insights into interest rates that could impact gold prices. In May, Germany’s industrial production rose by 1.2%, easing concerns about a recession and putting additional pressure on gold. The recent BRICS summit in Rio de Janeiro discussed plans to reduce reliance on the US Dollar, while a new policy from the US President could impose more tariffs on countries cooperating with BRICS.

Gold Market Uncertainty

Currently, gold is trading below key moving averages, showing a slightly bearish trend. If it falls below $3,292, we might see further declines. However, if trade tensions rise again, demand for safe-haven assets could drive prices higher, potentially reaching the $3,375 to $3,400 range. These factors contribute to the ongoing uncertainty in the gold market. With gold trading under its key moving averages, short-term traders should be cautious of downward pressure unless there’s a catalyst to shift sentiment. The price drop below $3,300 and approach to $3,280 indicates a slowdown, suggesting broader caution. Traders making structured positions should consider this trend, especially if upcoming economic data remains positive. Germany’s 1.2% increase in industrial output last week, though modest, offers a counterpoint to recent pessimism regarding Europe’s economy. This reduces the urgency for gold as a safe haven, enhancing positive sentiment for European equities and potentially drawing investment away from metals. We typically see pressure on gold prices when capital shifts like this occur.

Tariff Developments Impact

Meanwhile, new tariffs from the United States are complicating the situation. New duties on Japan and South Korea—25% and 30% respectively—have caused immediate reactions in the currency markets, increasing the value of the US Dollar. This stronger dollar generally lowers gold’s value in dollar terms. The White House’s stance on potential future tariffs targeting countries moving away from the dollar adds another layer of complexity. Markets are weighing geopolitical pressures against possible shifts in central bank policies. The conclusion of last week’s BRICS summit focused on reducing dollar use. While not surprising, it raises future risks. As BRICS countries work to protect themselves, dollar-linked assets like gold may face distortions. While we don’t see immediate price changes from this discussion, it will require consideration from traders with leveraged positions, especially those with mid-month expiries. Now, all attention is on the upcoming release of the Federal Open Market Committee’s meeting minutes, which could support or challenge current beliefs about US rates. If these minutes indicate that policymakers are cautious or patient, gold could stabilize and recover some losses. Conversely, if the tone suggests tighter monetary conditions, traders in metals should brace for limited upside. As volatility surrounds geopolitical statements and macroeconomic updates, it’s vital to keep an eye on price movements. If the current support level at $3,280 breaks, a quick decline is likely. Although some buying interest might emerge later, immediate support is not clearly visible. Should any disruptions occur—such as renewed tariffs or unexpected central bank statements—the safe-haven appeal of gold may strengthen. In this scenario, renewed buying could target the $3,375 to $3,400 range quickly if short positions are unwound. Current positions should account for increased sensitivity to market movements and plan accordingly for the week’s data releases. Staying flexible with exposure is crucial. Those who wait for clear market direction may find more favorable outcomes compared to those expecting a swift reversal. Create your live VT Markets account and start trading now.

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