Gold struggles to recover intraday gains amid renewed Dollar strength and risk-on mood

Gold (XAU/USD) remains under pressure as it fails to capitalize on a modest intraday recovery during early Asian trading on Monday. The precious metal trades nearly flat around $3,336–$3,335, after opening the week with a minor downside gap. A firm U.S. dollar, now rising for a third consecutive day, remains a key headwind. Additionally, renewed optimism surrounding trade agreements — especially a fresh deal between the U.S. and Europe — continues to weigh on the safe-haven appeal of gold.

Still, traders appear cautious about placing aggressive directional bets ahead of this Wednesday's pivotal FOMC policy decision. Market participants await stronger cues on whether the Federal Reserve will maintain or shift its stance on rate cuts. Until then, U.S. macro data due throughout the week may offer additional insights for short-term positioning in the XAU/USD pair.

Daily market drivers: Bulls remain sidelined amid Dollar strength and trade optimism

Over the weekend, President Donald Trump and EU Commission President Ursula von der Leyen announced a comprehensive trade deal that includes a 15% baseline tariff on most European goods entering the U.S. This followed similar trade progress between the U.S. and Japan, and reports of renewed negotiations with Chinese officials aimed at extending the trade truce — all of which bolstered investor appetite for risk assets.

Despite starting the week on a softer note, the greenback remains supported by expectations of a steady Fed, especially given the resilience of the U.S. labor market and ongoing inflationary concerns tied to tariffs. Meanwhile, Trump’s repeated attacks on Fed Chair Jerome Powell over rate policy continue to fuel concerns about central bank independence. Calls from Fed Governor Christopher Waller and Trump-appointed Vice Chair for Supervision Michelle Bowman for a July rate cut add another layer of political pressure.

Investors will closely monitor Wednesday’s FOMC decision, accompanying statement, and Powell’s press conference for any clarity on the Fed’s future path. Until then, gold may remain in limbo, caught between defensive dollar positioning and uncertainty surrounding Fed autonomy.

Technical analysis: Gold faces pressure after channel breakdown

Friday’s breakdown below the short-term ascending channel and the 50% Fibonacci retracement of the June rally triggered a notable wave of selling in XAU/USD. Momentum indicators on the daily chart are beginning to skew bearish, suggesting further downside may be likely. That said, the metal found stability around the 61.8% Fibonacci retracement zone ($3,312–$3,311), rebounding modestly to start the week.

To confirm additional downside, gold would need to break decisively below this support range. Such a move would open the door toward $3,300 and potentially a retest of the monthly low around $3,283–$3,282.

On the upside, immediate resistance awaits near the 200-period SMA on the H4 chart at $3,351–$3,352. A breakout above this zone may trigger short-covering toward the $3,371–$3,373 supply region. If momentum persists, gold could revisit the $3,400 psychological mark, followed by the major resistance band at $3,438–$3,440.

Looking ahead

Market sentiment remains fragile, with investors split between fading gold’s safe-haven appeal and hedging against potential policy shifts from the Fed. All eyes are now on the FOMC’s July meeting and key U.S. economic releases — including durable goods and PCE inflation — which may tilt the balance of power between gold bulls and bears.