Gold Price Forecast: XAU/USD buyers struggle even as geopolitical risks linger

Gold price is trying hard to defend the critical daily support line near $3,295 early Wednesday, as the focus now shifts toward the Minutes of the US Federal Reserve’s (Fed) May policy meeting.

Gold price awaits Fed Minutes, geopolitical updates

Easing trade and bond market concerns offered the much-needed respite to the US Dollar (USD), enabling a deeper correction in the USD-denominated Gold price from two-week highs of $3,366 set last week.

Gold price briefly tested levels sub-$3,300 on a positive shift in risk sentiment, spurred by US President Donald Trump’s backtracking on 50% tariffs announced Friday on European Union (EU) imports from June 1, extending the deadline to July 9.

Meanwhile, global bond markets breathed a sigh of relief on reports that Japan is considering  trimming super-long bond issuance amid spiking 30-year Japanese government bond (JGB) yields.

This fuelled a sharp decline in the US Treasury bond yields but Gold price failed to benefit due to hawkish Fed commentary and upbeat US Consumer Confidence data.

The Conference Board said on Tuesday its Consumer Confidence Index rose to 98.0 this month, courtesy of the temporary US-China trade truce.

Meanwhile, Minneapolis Fed President Neel Kashkari said on Tuesday that he supports the stance to maintain interest rates until there is some more clarity on the impact of higher tariffs on inflation.

Heading toward the Fed Minutes release, Gold buyers are struggling amid a sustained US Dollar recovery and rebounding US Treasury bond yields.

Previewing the Fed Minutes, TDS Securities noted: “We expect them to reiterate that economic uncertainty remains a key factor for the US outlook, leading to policy guidance that has remained cautious. The Fed's not in a hurry to make any policy changes, with the current stance well-positioned to respond to any material changes in the outlook.”

Buyers are unable to find any inspiration from escalating Russia-Ukraine geopolitical tensions.

Earlier this week, “Russia fired a record 355 Shahed drones as well as nine cruise missiles, in an escalating drone campaign targeting Ukraine’s cities and communities,” The Guardian reported, confirming it was the largest drone attack since Moscow launched its full-scale invasion in February 2022.

Trump warned that Moscow risked new sanctions. “What Vladimir Putin doesn’t realize is that if it weren’t for me, lots of really bad things would have already happened to Russia, and I mean REALLY BAD,” Trump said on his Truth Social network on Tuesday. “He’s playing with fire!”

Gold price technical analysis: Daily chart

The short-term technical outlook could remain in favor of Gold price optimists if the 14-day Relative Strength Index (RSI) continues to hold ground above the midline.

Buyers also need to defend a powerful demand area near $3,295, which is the confluence of the 21-day Simple Moving Average (SMA) and the 38.2% Fibo of the April record rally, to keep the upside potential intact.

If sellers flex their muscles, a test of the 50% Fibo support at $3,232 will be inevitable, below which the 50-day SMA at $3,217 will come into play.

Conversely, a sustained break above the $3,350 psychological level is needed to resume the uptrend.

Further up, the $3,365-$3,375 confluence area will be tested. The zone is the confluence of the falling trendline resistance and the 23.6% Fibonacci Retracement (Fibo) level of the April record rally.

The next topside targets are aligned at $3,400 (round level) and $3,435 (static resistance).