Gold under pressure as the USD consolidates

Gold edged lower after the Federal Reserve decided to hold interest rates steady and maintained its wait-and-see stance. The Fed is in no rush to begin cutting rates, despite expectations of slowing economic growth and rising inflation driven by Trump’s tariffs. The US dollar strengthened following the meeting, as the rate decision signalled policymakers still see a resilient US economy and strong labour market conditions.

The greenback appears to be regaining favour with investors, supported by the conclusion of the second round of US-China trade talks and heightened geopolitical tensions stemming from the escalating Iran–Israel conflict. Risk-off sentiment has pushed demand higher for US government bonds and the dollar, with capital flows appearing to rotate back into US markets.

Historically, gold has maintained a negative correlation with the US dollar. The recent recovery in the greenback could point to further downside risk for gold. After a strong rally driven by tariff-induced uncertainty, the precious metal may now be due for profit-taking.

Chart 1 – The negative correlation between the US Dollar Index (DXY) and Gold

Source: TradingView as of 19 Jun 2025

Triple-top emerges in Gold

Chart 2 – Gold cash, daily

Source: TradingView as of 19 Jun 2025

A triple-top pattern appears to be forming on gold’s daily chart, indicating further potential for a technical pullback. At the recent high, a bearish engulfing candlestick pattern has also developed — a classic technical signal for potential downside movement. While the key resistance remains at the all-time high of around $3,444, immediate support lies at the 23.6% Fibonacci retracement level, followed by the 38.2% level.

Despite the current near-term bearish bias, gold’s long-term uptrend remains intact. In the medium to longer term, the US dollar is likely to weaken gradually and unevenly, which should continue to support gold’s underlying bullish outlook.