Gold Price Technical Analysis

The gold price is currently around $3,335, moving within Thursday’s range but lacking a clear trend. This uncertainty is linked to U.S. President Donald Trump’s upcoming announcements on new trade deals, ahead of the July 9 tariff deadline. Confirmed trade agreements exist between the U.S., the United Kingdom, and Vietnam, while discussions with China continue. Trump aims to finalize deals with India before the deadline and plans to send out trade tariff notifications soon. The market feels that U.S. tariffs on countries like Japan, those in the Eurozone, Canada, and Mexico could raise global trade tensions. As a result, demand for gold, typically seen as a safe investment, is increasing amid these geopolitical issues. Additionally, there are concerns over the potential fiscal impact of Trump’s tax cuts, which could significantly raise the national debt over the next decade. Technical analysis indicates that gold is close to the 20-day EMA ($3,342), with the RSI showing a sideways movement. A rise above $3,500 could lead to new highs, with resistance at $3,550 and $3,600. However, if the price drops below $3,245, it could fall toward $3,200. Gold is a traditional safe haven during economic uncertainty and inflation, with significant holdings by central banks to stabilize currency reserves. Its price tends to move inversely to the U.S. Dollar and interest rates. As talks and deals progress, gold prices are influenced by external factors, especially trade announcements and fiscal expectations from the U.S. government. Currently, prices hover around $3,335, indicating a lack of strong movement. This suggests that market participants may be hesitant to commit ahead of major news.

Market Impact Of Trade Tariffs

Recent updates confirm deals between the U.S., the United Kingdom, and Vietnam, while discussions with China remain unresolved. Trump’s push to finalize agreements with India, just before the July tariff deadline, creates a high-stakes situation where uncertainty is concentrated into days. As notifications of trade tariffs are set to be issued soon, market reactions might begin before the deadline arrives. Tariffs on traditional partners like Japan and key Eurozone nations, Canada, and Mexico could create more barriers. If these arise, they are likely to increase perceived risks for investors. Past examples show that trade policy triggers can elevate demand for hard assets, even when short-term interest rates are rising. Therefore, while we may face short-term volatility fed by news, the overall effect will probably support demand for safer investments. Our analysis indicates a current sideways movement in gold prices. The 20-day EMA is nearly flat, acting as a mid-point rather than indicating a clear trend. The RSI shows no strong momentum either way. A technical squeeze is developing, suggesting a breakout may be imminent. If prices break above $3,500, we expect buying activity to increase. After breaking through $3,550, some traders may seek protection or adjust their positions, which could further increase volatility. However, if prices drop below $3,245, they may slide down to around $3,200, with sellers likely gaining control. Watch for sudden shifts in momentum, especially from policymakers. In addition, tax changes are casting a long-term shadow on the market. New budget estimates indicate significantly higher borrowing needs over the next decade, raising questions about creditworthiness and long-term yields. If bond yields rise unchecked, it usually boosts the Dollar and reduces gold’s attractiveness. However, if yields increase due to concerns over deficits rather than strong growth, demand for tangible assets like gold tends to surge. We have seen this pattern before, in 2010 and in similar situations during tightening periods. The negative link between interest rates, the Dollar, and gold still exists but with varying intensity. Central banks continue to buy gold without pause during price swings, focusing on maintaining the long-term value of their reserves. This is vital to remember when considering any temporary price dips. At this time, gold sits between two significant technical levels, and options pricing suggests changing dynamics. Implied volatility is beginning to rise, indicating that hedgers are preparing for movement. If prices break in one direction, stop-loss orders may trigger, resulting in exaggerated market moves. Caution is advised; acting too quickly may lead to losses from whipsaws, while hesitating could result in missed opportunities if the market takes off. We’re closely monitoring participation levels in each trading session, looking for volume to confirm trends. Only then will we adjust our exposure with greater confidence. Create your live VT Markets account and start trading now.

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