Gold Price Downside Limited Amid Geopolitics, Tariff Concerns | Errante
- Market Analysis
Market Overview
The gold price stays defensive on Friday as it hit a fresh daily low near $3,340 during Asian session. However, the precious metal found a slight respite amid dollar weakness as we head through the European session. The gold’s downside is limited due to geopolitical risk and institutional demand.
Fundamental Analysis
Gold has been under pressure, looking to close with weekly losses. The major resistance comes from Fed’s hawkish move that surprised the market. In its recent meeting, Fed reaffirmed the higher-for-longer stance, projecting only two rate cuts by the end of 2025 while one cut in 2026 and one more in 2027. The tighter outlook has dimmed the appeal of non-yielding assets like gold.
Although the gold price remains under bearish pressure, the downside seems limited as the geopolitical concerns in the Middle East are mounting. The US has reportedly approved the attack plan on Iran. However, President Trump asked to wait for two weeks to see if Iran accepts to negotiate. Statements from G7 leaders and US Senate Intelligence Committee also reaffirmed that the risk of further escalation in the region persists. It means the gold may find support due to safe-haven demand.
The reason behind gold’s recent pullback is recalibration of markets for the Fed’s easing. The central bank’s dovish pivot appeared slower than expected, especially after fears of inflation reacceleration due to Trump tariffs. The uncertainty prevails as we approach near the tariff deadline of July 9. The gold can benefit from this uncertain global outlook.
The institutional demand for gold keeps its long-term outlook strongly supported. The central banks have bought 244 tons of gold by Q1 2025 while the figure may exceed 1,000 tons by end of the year.
Overall, the price may remain within the broad range of $3,200 to $3,400 level in the coming months. The price is expected to stay supported due to institutional buying and uncertain global outlook.
Technical Analysis
The gold market has recently exhibited a downward movement, retracing to the 61.8% Fibonacci level calculated from the lows of June 6 to the highs of June 13. On the H4 chart, this area is showing signs of a potential bearish change in character, suggesting it could act as a demand zone for gold if the proce breaks to the upside. This technical setup is further supported by the prevailing market uncertainty, amplified by the two-week waiting period announced by Trump, which may provide gold buyers an opportunity to regain momentum. Historically, this level has served as resistance, and its current role as potential support underscores its significance as a key level for traders. A sustained bullish momentum could emerge if gold successfully breaks above the 3400 mark, signaling a shift in market sentiment and offering a clearer path for upward movemen
Conclusion
In conclusion, while gold faces short-term pressure from the Fed’s hawkish stance, its downside remains limited due to escalating geopolitical tensions, global uncertainty, and strong institutional demand, keeping its long-term outlook supported.
