Gold price bears retain control ahead of FOMC Minutes, seems vulnerable below $3,300

Gold price (XAU/USD) retains its bearish bias for the second straight day on Wednesday and trades near the $3,285 region, or over a one-week low during the first half of the European session. The US Dollar (USD) stands firm near a two-week top amid expectations that the Federal Reserve (Fed) would keep interest rates elevated in anticipation of worsening inflation as a result of higher import taxes and a resilient US labor market. This remains supportive of elevated US Treasury bond yields and weighs on the non-yielding yellow metal.

Apart from this, a stable performance around the European equity markets turns out to be another factor exerting additional downward pressure on the safe-haven Gold price. However, concerns about the potential economic fallout from US President Donald Trump's trade tariffs keep investors on edge, which, could help limit losses for the XAU/USD pair. Traders might also opt to wait for the release of FOMC meeting Minutes, which could offer cues about the Fed's rate-cut path and provide some meaningful impetus to the precious metal.

Daily Digest Market Movers: Gold price struggles to attract buyers as reduced Fed rate cut bets offset trade tensions

• US President Donald Trump unnerved investors earlier this week by announcing higher tariff rates against a slew of major economies starting August 1. Moreover, Trump vowed to further escalate his trade wars on Tuesday, threatening US tariffs of up to 200% on foreign drugs and 50% on copper.
• Investors now seem convinced that US tariffs will eventually feed through into higher prices and allow the Federal Reserve to stick to its wait-and-see approach. Moreover, the upbeat US jobs report for June eased concerns about a slowing US economy, and a July Fed rate cut is completely off the table.
• This, in turn, pushed the yield on the benchmark 10-year US government bond and the US Dollar to a two-week high, making the non-yielding Gold price less attractive. The USD bulls, however, seem reluctant and opt to wait for more cues about the Fed's rate cut path before placing fresh bets.
• Meanwhile, investors are still pricing in the possibility of 50 basis points worth of Fed rate cuts by the end of this year, starting in October. Hence, the minutes of the last FOMC meeting and speeches by several Fed officials this week will be looked for more insights into the central bank's policy outlook.
• In the meantime, Trump's rapidly shifting stance on trade policies and worries that steep US tariffs would negatively impact the global economy keep investors on edge. This might hold back traders from placing aggressive bearish bets around the safe-haven XAU/USD pair and limit deeper losses.

Gold price could accelerate the downfall once the $3,270 horizontal support is broken

The overnight failure near the 100-period Simple Moving Average (SMA) pivotal resistance on the 4-hour chart and acceptance below the $3,300 mark could be seen as a key trigger for the XAU/USD bears. Moreover, oscillators on the daily chart have just started gaining negative traction and suggest that the path of least resistance for the Gold price is to the downside. Hence, a subsequent fall towards the next relevant support near the $3,270 horizontal zone, en route to the $3,248-3,247 region or the June monthly swing low, looks like a distinct possibility.

On the flip side, attempted recovery beyond the $3,310 immediate hurdle might now face some hurdle near the $3,326 area. Any further move up might continue to attract fresh sellers near the 100-SMA on the 4-hour chart, currently pegged near the $3,340 region. Some follow-through buying, leading to subsequent strength beyond the $3,359-3,360 supply zone, could trigger a short-covering move and allow the Gold price to reclaim the $3,400 round figure.