Markets Await Fed Decision, Gold Consolidates in Positive Zone
Gold recorded a slight decline in trading on Tuesday (July 22nd) morning, driven by a slight strengthening of the US dollar amid geopolitical uncertainty and potential US tariffs on the European Union.
Spot gold prices were stable at around US$3,385 per troy ounce, continuing yesterday's positive trend.
The 0.6% weakening of the US dollar index overnight was one of the main catalysts for the strengthening gold price. A weaker dollar makes gold cheaper for investors holding currencies other than the dollar, thus increasing the appeal of the precious metal.
Furthermore, dovish comments from Federal Reserve officials, although not indicating an imminent interest rate cut, also supported market sentiment towards gold.
"The market is currently more focused on the Fed's future policy direction than on short-term interest rate decisions. This is keeping interest in gold high," said an analyst from Moon-ForexAcademy, as quoted by TradingView.
Investors are also monitoring trade tensions between the United States and the European Union, ahead of the August 1 deadline for imposing tariffs on steel and aluminum exports. The threat of a trade war has prompted investors to turn to safe-haven assets like gold.
On the other hand, rising tensions in the Middle East and uncertainty about global economic growth have also strengthened gold's position as a hedge against systemic risk.
Strong support levels are found in the US$3,364–3,375 range, while key resistance levels are at US$3,400 and US$3,435. If prices can break through these resistance zones, gold has the potential to continue strengthening to new highs this month.
Although there is still uncertainty regarding the direction of the Fed's policy or US trade tariff decisions, the gold market appears likely to remain supported by capital flows into defensive assets. Investors are advised to remain vigilant regarding dollar fluctuations and US economic data releases this week. (mrv)
Source: Newsmaker
