Gold slips for the third day as safe-haven demand weakens and the Dollar strengthens

Gold prices came under renewed pressure for a third consecutive session, failing to hold above the critical $3,400 zone, as renewed demand for the U.S. dollar and improving global risk sentiment weighed on the safe-haven metal. The recent optimism surrounding potential trade deals between the United States and both Japan and the European Union further eroded gold’s appeal as a defensive asset.

Still, the downside in gold remains limited for now, as lingering uncertainty over the Federal Reserve’s path on rate cuts and mounting concerns over its independence amid growing political interference keep traders cautious. On top of that, the escalation in border tensions between Thailand and Cambodia added a geopolitical undertone to the market, which has helped cushion the decline in the yellow metal.

Economic backdrop supports the Dollar: Resilient US labor market and service sector strength

U.S. economic data released Thursday highlighted continued labor market strength. Jobless claims fell for the sixth straight week to 217,000, the lowest since mid-April. Meanwhile, S&P Global’s flash PMI readings painted a robust economic picture, with the composite index rising to 54.6 in July. The services sector led the gains, climbing to 55.2 – its highest level of the year – even as manufacturing showed modest contraction.

This sturdy macro backdrop strengthened expectations that the Fed will hold rates steady in its policy meeting next week. Despite ongoing pressure from the White House to ease borrowing costs, the Fed is seen favoring a wait-and-see approach, especially as import costs rise due to ongoing tariffs.

Fed under pressure – Yet the Dollar holds firm

In a rare visit to the Fed headquarters, President Trump launched a direct critique of Chair Jerome Powell for maintaining his hawkish stance. Fed Governors Chris Waller and Michelle Bowman – both considered Trump allies – have openly called for immediate rate cuts at the upcoming July 30 meeting. This rising political pressure has reignited debate over the Fed’s independence, creating a potential source of future volatility for both the dollar and gold.

Technical view: Gold finds support at key moving averages, bulls eye $3,400 recovery

From a technical standpoint, gold continues to find initial support near the 100-period SMA on the H4 chart, currently around $3,351. A successful defense of this level could spark a rebound toward the $3,400 handle, with further resistance seen between $3,438 and $3,440 – the upper boundary of the rising channel established since early July.

However, if gold decisively breaks below this zone, the next support rests around $3,335, aligned with the lower trendline. A clean break here may expose the $3,309 area, followed by the monthly low at $3,283–$3,282.

What’s next for the market?

Traders are now awaiting the U.S. Durable Goods Orders report for near-term catalysts 16:30 GMT+4. All eyes remain on the Fed’s policy outlook, political headlines, and any fresh geopolitical developments that could shift risk sentiment and redirect investor flows.

In this highly volatile landscape, gold remains delicately balanced between selling pressures and supportive forces, caught in a tug-of-war between macroeconomic fundamentals and market psychology.