Precious metals have started the new week brightly. ended the previous week 0.5% higher and thus scored a second consecutive weekly gain, with outperforming after it continued to make new multi-year highs. The yellow precious metal has been relatively quiet in recent weeks after surging to repeated new highs earlier this year.
Still, within its consolidation, the metal has remained supported on the dips, and it is now up for the fourth consecutive trading day. The more recent gains seem to have been driven by revived trade uncertainty, which has also started to weigh on equities. At the weekend, Trump threatened to impose 30% tariffs on the EU and Mexico, following a number of other escalated trade measures against multiple partners.
However, the markets’ reaction has been mild, suggesting traders view them as a bargaining tactic and expect final tariffs to be softer. Still, as we get closer to the August 1 deadline and there are no major breakthroughs in the talks, this could inject uncertainty into the market and could keep gold prices near record highs. The focus for this week will be on tariffs, but we will also have important from the US to look forward to.
Will We See Any Major Trade Deals With Tariff Deadline Looming On August 1?
Gold has now posted gains in six of the past seven quarters, delivering more than a 75% return over that span. Yet, after hitting a record high of $3,500 in April, gold spent much of Q2 consolidating near its peak levels, showing some signs of exhaustion. But recently, trade uncertainty has risen again with Trump threatening higher tariff rates on a number of countries starting on August 1, unless there are deals in place ahead of the deadline.
It is possible that the metal may surpass that level if the trade war heats up again, although any major deals could see demand for the haven asset drop. For now, the uncertainty is keeping the metal on the front foot.
What About The Longer Term Outlook?
Well, it depends on how long we are talking about. The impact of higher tariff rates means inflation is going to start rising again. If so, the won’t be able to cut the rate quickly and by much. This in turn could see bond yields extend their rise and, in doing so, undermine the appeal of not only expensive growth stock but also those of zero-yielding assets like gold. That is assuming that the US debt doesn’t get downgraded again by ratings agencies.
It is also worth pointing out that the gold market may have overpriced the risks of a full-blown trade war. The metal didn’t ease back nearly as much as stock markets rallied from their April lows, when trade optimism lifted sentiment. Proponents, however, would argue that it was the stock markets that overreacted, given that no major deals were made. Either way, the uncertainty is helping to support gold prices for now.
All told, I reckon that after a remarkable performance in the first half of 2025, gold is likely to transition into a phase of consolidation, or a drop, later in the year when we could see demand for safe-haven assets subside. However, in the short term, US trade dynamics and stock market volatility will continue to play a pivotal role in shaping gold’s direction.
Will Dollar Extend Recovery?
The US dollar gained ground last week, underpinned in part by unexpectedly strong economic data, but more to the point, because of concerns about inflation. President Trump’s threats of higher tariffs and expansive fiscal plans—described as “big, beautiful” spending and tax initiatives – are among factors that increase the risk of more persistent inflation.
While the Federal Reserve is still widely expected to initiate rate cuts in September, the rising inflationary pressures could slow the pace of easing thereafter. This shift would likely provide support for the dollar so long as investors don’t lose trust in US monetary policy.
CPI and Retail Sales Among Key Data Highlights
Whether the recovery for the dollar gathers pace will not only depend on trade talks but also on economic data. This week, we will have CPI and data to look forward to.
CPI will be released on Tuesday. So far, the inflationary impact of Trump’s tariffs, his spending plans, and upcoming tax cuts has not been shown in hard data. But it’s possible that inflation may stick around longer than markets anticipate, delaying or limiting rate cuts.
Meanwhile, US retail sales are due on Thursday. Recent data suggests the US economy is holding its own relatively well, considering the trade war uncertainty. But are consumers splashing the cash? fell 0.3% m/m in May, but that drop is expected to have been made good in June.
If retail sales are better and/or CPI is hotter, then this could send the and bond yields higher, and in doing so, provide some headwind for gold prices.
Gold Technical Analysis and Trade Ideas
There is no doubt that the technical trend on gold is still bullish, even if we haven’t seen any new highs in recent months. But while gold is still inside a larger consolidation zone, traders must remain vigilant and open-minded to the idea that prices could fall, even if that outlook didn’t look likely at the time of writing.
For now, gold has managed to hold above its 2025 bullish trend line, and with silver breaking to new multi-year highs, the bulls are in full control. But should the trend line break in the coming days, then that could ignite some volatility in gold prices.
As before, key support remains at $3,300 – only a decisive break below here would be a technical bearish outcome. Any short-term dips, therefore, should be treated as normal pullbacks inside a larger bull trend. Interim support now comes in at $3,350, a level that was providing resistance in the last couple of weeks.
The next resistance levels overhead come in at around $3,400 and $3,430. Above those hurdles, the bulls may then aim for the highs of June and April at $3,451 and $3,500, respectively.
The bears will be eyeing a break below the $3,300 region. If this scenario plays out, then we could see a run on the stops resting below the June low of $3,247 initially, ahead of the next support region between $3,167 to $3,200, next.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.