Gold price outlook: XAU/USD struggles as Fed rate fears and tariff risks collide

Gold (XAU/USD) is struggling to find clear direction as economic and political risks collide. Prices attempted a rebound but quickly lost steam. Traders are reacting to renewed tariff threats and expectations of prolonged high interest rates. At the same time, safe-haven demand is keeping gold supported. Market participants now watch for clues from the upcoming FOMC minutes to guide the next move.

Gold (XAU/USD) faces pressure from tariff uncertainty and Fed rate outlook

Gold started the week with a modest rebound but failed to sustain its upward momentum. The price edged lower and maintained a slightly negative tone. Despite bouncing from the $3,300 support area, gold remains below key resistance around the $3,350 level. Buyers seem hesitant to push prices higher amid mixed market signals. The lack of strong follow-through suggests caution among traders ahead of key economic updates.

The primary pressure on gold comes from expectations that the Federal Reserve will keep interest rates elevated. These expectations are driven by inflation fears sparked by President Trump’s newly extended and expanded tariff measures. Trump has set August 1 as the new deadline and introduced broader trade penalties targeting Asian and African nations. Additionally, countries aligning with BRICS could face an extra 10% tariff, intensifying concerns over global inflation and economic uncertainty.

Despite these pressures, gold continues to draw support from geopolitical tensions and rising risk aversion. Investors remain cautious amid fears of economic fallout from the tariffs and a weakening global equity market. Although the U.S. Dollar gained on Monday, its strength faded on Tuesday due to growing uncertainty about the economic effects of Trump's policies. In the absence of major U.S. data on Tuesday, markets now await Wednesday’s FOMC meeting minutes, which could provide fresh guidance on the Fed’s interest rate outlook and shape gold’s next significant move.

Key trend lines signal potential breakout opportunity

The gold chart below shows a strong bullish structure, supported by two key trend lines known as the Primary Trend Line and the Immediate Trend Line. The Primary Trend Line, shown in orange, has been in place since early 2024 and defines the long-term upward trajectory. It has consistently acted as a reliable support zone, holding firm through multiple market corrections and confirming the overall bullish bias.

The Immediate Trend Line captures recent short-term price behavior, connecting higher lows and forming a converging pattern with horizontal resistance near $3,400. This setup resembles a symmetrical triangle, a common continuation pattern that often precedes a breakout. Gold is currently trading just below this resistance level, around $3,336. A successful breakout above $3,400 would confirm the bullish continuation. On the other hand, a drop below the immediate trend line could bring prices closer to the primary support around $3,000.

Market volume remains stable, and there are no clear signs of momentum divergence. This indicates that traders are likely awaiting a fundamental trigger, most likely the upcoming FOMC minutes, to confirm the next directional move. As long as gold holds above the Primary Trend Line, the broader uptrend stays intact. However, a decisive break below this level could shift sentiment and weaken the longer-term bullish outlook.

Conclusion

Gold remains caught between opposing forces as traders await clarity. Tariff tensions, Fed policy uncertainty, and inflation fears continue to pressure prices. At the same time, safe-haven demand and strong technical support provide stability. The market now looks to the FOMC minutes for direction. A clear signal could trigger the next major move in gold.

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