Gold Price Forecast: XAU/USD Trades Sideways Around $3,335, Awaits Clarity on Tariff Policy
As of Friday’s European trading hours, gold prices (XAU/USD) are trading sideways near the $3,335 mark, showing signs of volatility compression. Investors are holding their positions cautiously as they await more clarification regarding the United States’ tariff policies, which are set to be determined before the July 9 deadline.
Current Market Overview
The yellow metal continues to oscillate within Thursday’s established trading range, struggling to find a clear direction amid uncertainty surrounding the possibility of new tariffs. US President Donald Trump had initiated a 90-day pause on reciprocal tariffs on April 2 to give trading partners time to negotiate new trade deals. As this pause period draws closer to its end, the market is keenly focused on which countries the US will target next.
So far, Washington has finalized trade deals with the United Kingdom and Vietnam, and reached a framework agreement with China. President Trump has expressed confidence about securing agreements with other nations, highlighting India as a potential partner that could sign a trade deal before the July 9 tariff imposition deadline. He has also announced plans to begin “sending letters on trade tariffs starting Friday,” which could signal forthcoming changes.
Market analysts are wary that tariffs imposed on key US trade partners such as Japan, the Eurozone, Canada, and Mexico—if they fail to secure agreements—could destabilize global trade relations. Such geopolitical tensions typically increase demand for safe-haven assets like gold, impacting its price dynamics.
Impact of US Fiscal Policies on Gold
Adding to gold’s appeal is the recent approval of President Trump’s so-called “Big Beautiful Bill” by the House of Representatives, which has raised concerns about the expansion of the US national debt by an estimated $3 to $3.5 trillion over the next decade. This increase in fiscal risk has encouraged investors to seek refuge in gold, traditionally viewed as a safeguard against economic uncertainty.
Technical Outlook
From a technical standpoint, gold is currently trading near the upward-sloping trendline of an Ascending Triangle pattern on the daily chart. This trendline stems from the April 7 low of $2,957, while the horizontal resistance of this pattern is anchored around the April 22 high near $3,500. A decisive break above $3,500 could propel gold into new price territories, with potential resistance levels at $3,550 and $3,600. Conversely, a breakdown below the upward trendline or below the May 29 low of $3,245 could lead to a downward move towards key support levels at $3,200 and $3,121. Near-term indicators such as the 20-day Exponential Moving Average (EMA) currently at $3,342 and the 14-day Relative Strength Index (RSI) fluctuating between 40 and 60 suggest a lack of clear momentum and signal a sideways trend.
Why Investors Choose Gold
Historically, gold has been a reliable store of value and medium of exchange. Today, it is widely regarded not only for its use in jewelry and industry but more importantly as a safe-haven asset during times of economic or geopolitical turmoil. It is also considered an effective hedge against inflation and currency depreciation because it is not tied to any specific government or currency issuer.
Central banks globally remain the largest holders of gold, using it to diversify reserves and bolster confidence in national economies. Emerging economies such as China, India, and Turkey have significantly increased their gold reserves in recent years. According to the World Gold Council, central banks purchased 1,136 tonnes of gold worth about $70 billion in 2022, marking the highest annual acquisition on record.
Relationship with Other Assets
Gold prices often move inversely with the US Dollar and US Treasuries, which are also safe-haven assets. A weaker dollar tends to lift gold prices, as it makes the commodity cheaper for holders of other currencies. Gold also commonly exhibits a negative correlation with risk assets like equities; stock market rallies usually dampen gold’s appeal, while sell-offs tend to boost demand.
Final Thoughts
The gold market remains in a state of cautious anticipation amid looming tariff decisions and fiscal policy developments in the United States. While prices hover in a narrow range around $3,335, breaking the critical $3,500 resistance could pave the way for new highs, whereas a sharp decline below key support levels could trigger significant downside. Investors and traders are advised to monitor trade negotiations closely, alongside technical indicators, as these factors will likely dictate the near-term trajectory of gold prices.
Disclaimer: The information provided in this article is for informational purposes only and does not constitute investment advice. Market conditions may change rapidly, and investors should conduct their own thorough research or consult with a financial advisor before making investment decisions.