Photo by Dmitry Demidko on Unsplash
 

Gold (XAU/USD) is hovering slightly lower amid modest pressure from a stronger US Dollar. The slight weakness in gold price is due to a stronger US Dollar, which typically pressures commodities priced in USD. However, gold remains supported above recent lows, as various global and domestic factors continue to influence its trajectory. Traders are weighing the possibility of further Fed rate cuts, renewed US-China tariff tensions, and persistent geopolitical instability.
 

Geopolitics and Trade Policy Uncertainty Keep Gold in the Spotlight

Gold prices are reacting to several major macroeconomic events. First, a federal appeals court reinstated Trump-era tariffs, reversing a lower trade court’s decision. This sudden move has added uncertainty to trade policy, making investors cautious. Gold, being a traditional safe-haven asset, benefits from such market uncertainty.

Moreover, there’s rising speculation that the Federal Reserve may lower interest rates later this year. While the May FOMC meeting minutes showed a cautious approach, several Fed officials, including Mary Daly and Austan Goolsbee, indicated openness to rate cuts if inflation softens and labour markets stay strong. Global tensions also underpin gold. The Kremlin announced that Ukraine hasn't yet responded to a proposed peace talk initiative in Istanbul. Unresolved geopolitical issues like this typically increase demand for gold as a risk hedge.

Additionally, the market is now eagerly awaiting the US PCE Price Index, a key inflation metric. If inflation comes in lower than expected, this could cement expectations for a rate cut. Lower rates generally weaken the US Dollar and boost non-yielding assets like gold. Together, these factors create a mixed but overall supportive fundamental backdrop for gold, even as short-term selling pressure emerges.
 

Technical Analysis: Ascending Triangle Pattern Signals Bullish Gold Price Momentum

The gold chart below shows a well-formed ascending triangle pattern, a bullish technical formation. This setup typically signals a continuation of the uptrend, provided that resistance is breached. Support for gold has been rising steadily, as marked by the upward-sloping trend line connecting higher lows since January 2025. This is a sign of increasing buying interest at higher levels.

(Click on image to enlarge)

The resistance zone between $3,430 and $3,500 has been tested multiple times. Each rejection from this zone has been less severe, and buyers have consistently stepped in near the trend line, strengthening the bullish structure.

Currently, gold is consolidating just below the $3,300 mark. The price remains above the ascending trend line and above the previous swing low near $3,200. As long as gold holds above this trend line, the bullish bias remains valid.

A confirmed daily close above $3,430 would likely trigger a breakout toward the $3,500 level. If this level is breached, gold could enter a new bullish phase, with the next target potentially around $3,600 or higher. However, a breakdown below the ascending trend line would invalidate this pattern and could lead to deeper losses. Traders should also keep an eye on volume during the breakout attempt. A breakout with strong volume would validate the move, while a weak breakout may signal a false alarm.
 

Conclusion

Gold continues to trade under mild pressure from a firmer US Dollar, but key fundamentals and technical patterns support a potential rebound. Traders are closely watching Fed signals, tariff developments, and geopolitical headlines. These factors are driving demand for gold as a safe-haven asset. The ascending triangle pattern on the chart shows strong buying interest at higher levels. If gold breaks above key resistance, it could trigger a fresh bullish move. Until then, price action near trend line support will remain critical. 

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