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On analyzing the movements of the gold futures amid growing concerns over the scramble trade deals ahead of President Donald Trump’s July 9 deadlines for tariffs while the investors pondered the prospects of U.S. interest rate cuts as Trump has said he was not considering extending the July 9 deadline for countries to negotiate trade deals with the United States.
Undoubtedly, if President Donald Trump once again steps back from this issue, it could extend bearish pressure on the yellow metal, as his hard stance on trade deals casts doubts again, given that it is not practically possible to complete such negotiations within a week.
I anticipate that if the tariffs get ramped up again and sours in short term, we can see some volatility as the data on Tuesday showed the U.S. labour market remained resilient with a rise in job openings for May, sharpening the focus on the payrolls report due on Thursday as investors try to gauge when the Federal Reserve is likely to curt rates next.
Secondly, Fed Chair Jerome Powell, under fire from Trump to cut rates immediately, reiterated that the U.S. central bank plans to “wait and learn more” about the impact of tariffs on inflation before lowering interest rates.
Undoubtedly, such a scenario maintains a bearish bias on the US Dollar while the EUR/USD last bought at $1.1799, just below the 3-1/2-year high it touched on Tuesday, and the yen was steady at 143.22 per dollar.
I anticipate that any disappointing data can prompt further dovish reprising of FOMC rate cuts and another round of selling in US dollar that could extend the volatility in gold futures this week as the upper limit of the gold futures is limited while the downside is open to test fresh lows during the second half of this year.
On the other hand, investor focus over the last few days has pivoted to the progress of Trump’s massive tax-and-spending bill, which is expected to add $3.3 trillion to the national debt. The legislation heads to the House of Representatives for possible final approval after U.S. Senate Republicans passed it by the narrowest of margins.
Undoubtedly, this bill has stoked fiscal worries, but the reaction was relatively muted after it passed the Senate, which could keep the benchmark U.S. 10-year yields steady, which tested a two-month low in the previous session.
I anticipate that the long-term yields will fall back materially in the next 6-12 months, which could extend selling pressure in gold futures as seen during the last week, while this week’s moves by gold futures indicate a limited upside despite some strength gained during the first two sessions of this week.
On analysis of the movements of the gold futures in the weekly chart, I anticipate that the gold futures could continue this sliding path due to the formation of an exhaustive hammer last week that is likely to get confirmation with the formation of a bearish candle this week once the gold futures find a breakdown below the immediate support at $3170.
Undoubtedly, the gold futures could hit the target at $2810, if do not hold the significant support at $3147 this month as the formation of a ‘Cup $ Handle’ in the weekly chart defines this target for the gold futures which is to be achieved by the end of this year as the physical and financial market factors could dent bullion by the end of 2025.
Finally, I conclude that despite some in-between rallies, gold futures could remain under selling pressure as the expectations of possible seismic and permanent shifts in the geopolitical concerns, coupled with financial market turbulence and the potential rise of ‘economic nationalism’ in the guise of higher tariffs after July 9, 2025 could limit any pull back in gold prices.
Disclaimer: Readers are advised to take any position in gold at their own risk, as this analysis is based only on observations.