Why Is Gold Losing Its Shine? Fed Rate Cut Uncertainty Meets Trade War Fears

The Bitcoin mining sitesGold Conundrum: Fed Policy vs. Trade War Dynamics

The precious metal market presents a fascinating study in opposing forces this week. After briefly recovering from one-week lows near $3,300, gold prices (XAU/USD) show tentative weakness during Asian trading hours. This price action reflects the market's struggle to reconcile two powerful narratives: diminishing Fed rate cut expectations versus growing global trade tensions.

Key Market Drivers

• Fed policy expectations continue evolving as traders reassess the likelihood of July rate cuts
• New tariff threats from the US administration create uncertainty about global trade flows
• Dollar dynamics show mixed signals as currency markets digest competing fundamentals

The extended deadline for reciprocal tariffs until August 1 has introduced fresh variables into the economic equation. Market participants now grapple with the potential inflationary impact of these measures, which could influence Fed policy decisions in coming months. This complex backdrop explains gold's current hesitation, caught between its traditional roles as inflation hedge and safe-haven asset.

Technical Landscape

From a chart perspective, gold faces immediate resistance near the $3,347-3,348 zone, coinciding with the 100-period moving average on four-hour charts. A decisive break above this barrier could open the path toward $3,400 psychological level. Conversely, failure to hold above $3,300 support might trigger extended declines toward $3,270.

Market participants await Wednesday's FOMC minutes for clearer signals about the central bank's policy trajectory. Until then, gold may continue oscillating within its current range as traders balance competing fundamental narratives.