Gold prices dipped below $1,900 on Tuesday, illustrating the complicated market forces at play that are putting pressure on gold’s price. XAU/USD pair witnessed minor intraday losses during the Asian-European transitional period. Investors continued to contend with escalating trade conflict, along with a re-emergent U.S. dollar weakness.
Even with all of these headwinds, gold price action has lacked meaningful bearish conviction. According to analysts, the precious metals market is witnessing a rare clash of opposing powers. This dynamic is preventing deeper follow-through selling and speaks to a fearful, skittish trader psyche. The price is still trapped into very important ranges that could determine its short-term path.
Thus the $3,347 to $3,348 area serves as an important psychological barrier for gold prices. If it does break above this level, the $3,358 to $3,360 resistance area stands as the next obstacle. Observations indicate that gold prices have faced rejection near the 100-period Simple Moving Average (SMA) on the 4-hour chart, suggesting that momentum may be stalling. If strength can sustain past this SMA, perhaps the strength can ignite a short-covering move. That might give some bullish support to the rare metal.
If gold prices are able to regain the $3,400 level, analysts think this might rally potentially more short-covering activity. Meantime, the $3,300 to $3,295 range is expected to offer $3,300 gold price immediate downside support. If the gold price rises above this range, it could set off a quick rally. Notably, this would bring prices down to the next major support level around the $3,270 horizontal zone.
On a macroeconomic level, the perilous trend is likely to worsen even more. This could pull gold down towards $3,248 to $3,247 region or even June’s monthly swing low. The market continues to be very reactive to the outside world, U.S economic policy and foreign news in particular and geopolitical events.
Together with emerging weakness in the USD, this has greatly assisted the gold price in limiting downside in the XAU/USD pair. At the same time, the broader market is looking ahead to future catalysts. Today, investors await the policy-setting Federal Open Market Committee (FOMC) meeting minutes due Wednesday. We’re sure that this exciting event will help them pay attention. U.S. President Donald Trump’s assorted policy threats have all market participants on high alert. The expected implementation of an additional 10% tariff on imports from China to the US could further harm gold valuations.
It is this interaction of opposite forces that is so important in creating a market bullish or bearish mindset towards the gold price. Traders should stay alert and pay attention to shifts within the market as they travel through this potentially destabilizing landscape.