Gold prices saw a decline on Thursday, influenced by a stronger dollar and diminishing market tensions following U.S. President Donald Trump’s statement that it was “highly unlikely” he would dismiss Federal Reserve Chair Jerome Powell.
In Dubai, gold rates reflected this downward trend, with 24-carat gold falling by AED1.25 to AED402.75. Similarly, 22-carat gold saw a decrease of AED1.75, reaching AED372.75. Additionally, 21-carat gold dropped AED1.75 to AED357.50, while 18-carat gold fell AED1.00 to AED306.50.
Vijay Valecha, chief investment officer, Century Financial, told Economy Middle East, ”Gold prices edged 0.54 percent lower on Thursday, driven by a rise in the dollar buying and a general risk-on sentiment in the market.
Spot gold was down 0.2 percent at $3,340.79 per ounce (currently trading above $3,339) as of 04:00 GMT. U.S. gold futures decreased 0.4 percent to $3,347.10 (currently trading above $3,344.8). The dollar index edged 0.1 percent higher against its rivals, rendering greenback-priced bullion more expensive for holders of other currencies.
Trump clarified on Wednesday that he is not planning to dismiss Powell, yet he left the door open to that possibility and reiterated his criticism of the central bank chief for not lowering interest rates.
Data indicated that U.S. producer prices were unexpectedly unchanged in June, as an uptick in the cost of goods due to tariffs on imports was counterbalanced by weakness in services.
Read more: Dubai 24-carat gold price today rises to AED405 with U.S. tariff threats looming
Cautious investor sentiment
Investor sentiment turned cautious on Wednesday, resulting in significant selling of the U.S. dollar and propelling the safe-haven gold price to a new multi-week high amid reports that President Trump was contemplating the removal of Federal Reserve Chair Jerome Powell. Nonetheless, market volatility subsided after Trump informed reporters that he was unlikely to fire the central bank chief.
On the economic front, the U.S. Producer Price Index (PPI) fell short of market expectations and remained flat in June, marking a significant slowdown in the prices of goods sold by manufacturers. Furthermore, comments from influential FOMC members suggest that the Fed is likely to wait until at least September before resuming its rate-cutting cycle.
Ongoing uncertainties surrounding Trump’s trade policies and their implications for the global economy keep investors on edge. This situation may continue to provide some support to the safe-haven gold price and warrants caution for bearish traders. Therefore, it may be wise to wait for strong follow-through selling before positioning for any further depreciating move. Investors are now looking ahead to the release of U.S. Retail Sales data and the usual Weekly Initial Jobless Claims. Moreover, remarks from key FOMC members should influence USD demand and create trading opportunities surrounding the non-yielding yellow metal.
In related news, New York Fed President John Williams cautioned that the impact of trade tariffs is currently modest but is expected to escalate over time. Williams emphasized that the economy is in a favorable position, the labor market remains robust, and the existing modestly restrictive monetary policy is appropriately placed to allow policymakers to assess the economy before making subsequent moves.
Fed’s interest rate outlook
Additionally, Dallas Fed President Lorie Logan stated that the U.S. central bank will likely need to maintain interest rates for some time to ensure inflation remains low. Logan further noted that anticipated tariff increases seem likely to generate inflationary pressures, and June CPI data suggests that PCE inflation, which the Fed targets to be at a 2 percent annual rate, will rise.
Nonetheless, traders continue to factor in the possibility of 50 basis points worth of easing by the Fed this year. This, coupled with concerns about the potential economic fallout stemming from Trump’s unpredictable trade policies, could bolster the demand for the safe-haven precious metal. In fact, Trump recently notified leaders of 25 countries about new tariff rates set to take effect on August 1.
Thursday’s U.S. economic calendar includes the release of monthly Retail Sales figures, the customary Weekly Initial Jobless Claims, and the Philly Fed Manufacturing Index. Additionally, comments from influential FOMC members will be closely monitored for insights regarding the Fed’s rate-cutting trajectory, which will influence the USD and provide momentum to the XAU/USD pair.
On the trade front, EU trade chief Maros Sefcovic traveled to Washington on Wednesday for tariff discussions, as confirmed by an EU spokesperson, who added that he will meet with U.S. Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer.
The SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reported that its holdings increased by 0.33 percent to 950.79 tons on Wednesday, up from 947.64 tons in the previous session. In other markets, spot silver rose 0.1 percent to $37.98 per ounce, platinum increased 0.2 percent to $1,419.67, and palladium nudged down 0.1 percent to $1,230.14.
Current support levels for gold
“Tensions between the U.S. and China eased following the removal of the AI chip export ban, which reduced trade-related concerns and weakened gold’s safe-haven demand,” noted Valecha.
He added that, “On the technical front, gold is trading at the 9 SMA and holding above the 50 SMA on the daily chart. Prices have been moving range-bound since the start of this month as gold lacks a major catalyst. Immediate support is seen at $3,325 level, which coincides with the upward trendline support connecting the lows of July 9 and July 16 on the one-hour chart. The next support is seen at $3,320, which was the previous breakout level. Below this level, prices could test the psychological $3,300 mark.”
“On the upside, immediate resistance is seen at the $3,342- $3,350 levels, which have been tested multiple times this month. A break above these levels could push prices to test the $3,365-$3,377 zone. Strong bullish momentum will be solidified once these levels have been breached, which could push prices to $3,405.”
