Gold Price Surges on Tariff Panic and CPI Fears, XAU/USD Targets $3,500

Gold Price Surges Toward $3,400 Amid Tariff Turmoil and Fed Ambiguity

XAU/USD Climbs on Escalating Tariff War and Haven Demand

The gold price (XAU/USD) surged to a fresh three-week high, nearing $3,370, as President Trump’s sweeping 30% tariffs on goods from the EU and Mexico triggered a wave of safe-haven inflows. The market also absorbed Trump's 35% tariff on Canadian goods, alongside threats of 20% blanket tariffs on other trading partners and a targeted 50% copper tariff, intensifying global economic uncertainty. As a result, institutional demand for gold accelerated, supported by fears of a broader trade fallout and a potential slowdown in global growth.

US Inflation and Fed Policy Add Volatility to XAU/USD Path

Investors turned their attention to the June CPI release on Tuesday, widely expected to show elevated inflation, reinforcing hawkish expectations. Chicago Fed President Goolsbee noted that the new tariffs have muddied the inflation outlook, making it harder to support rate cuts. This hesitance from the Federal Reserve to ease policy, despite political pressure, has driven USD strength, limiting gold’s upside in the short term. The DXY index rose to a three-week high, pressuring gold as it continues its battle between inflation hedge and non-yielding asset status.

EU Retaliation Threats Support Long Gold Trades

While EU Commission President Ursula von der Leyen confirmed talks with the U.S. are ongoing, she warned of proportional countermeasures if a deal is not reached before August 1. With the 21 billion euro retaliation package in standby, investors priced in sustained geopolitical tensions, further reinforcing demand for gold. The fragile sentiment across global equity markets, alongside a wait-and-see approach from the ECB, has driven both institutional and retail buyers to increase their gold exposure in anticipation of prolonged uncertainty.

Middle East Tensions Reinforce Geopolitical Risk Bid

Gold demand found further backing from intensifying conflict in the Middle East. Eight civilians were killed in central Gaza as Israel’s missile reportedly misfired. The incident added to broader tensions in the region. Steve Witkoff, Trump’s envoy to the Middle East, suggested the Qatar-mediated ceasefire talks offer hope, but traders continue to hedge against potential escalation, reinforcing XAU/USD's rally.

Technical Landscape: Breakout Looms Above $3,370 With Eyes on $3,500

Technically, gold is navigating a Symmetrical Triangle on the daily chart, with upward pressure building. The key support remains the 50-day EMA around $3,305.77, while the breakout above $3,360 signals strengthening bullish momentum. A sustained move above $3,400 opens the path toward $3,500, followed by higher resistance at $3,550 and $3,600. The RSI remains range-bound between 40–60, showing room for a momentum spike once a clean breakout materializes. If gold slips below $3,245, the correction could retest the $3,200 support zone and the May 15 low of $3,121.

Fed Minutes, CPI, and PPI Will Set Next Direction

Markets are pricing in more than 50 basis points of rate cuts by year-end, but June’s FOMC minutes revealed hesitancy among policymakers, especially in light of resilient job data. While only a minority of Fed members favored near-term cuts, inflation data this week will provide clarity. CPI on Tuesday and PPI on Wednesday, followed by FOMC commentary, will likely determine whether gold can maintain its bullish structure or face a pullback. For now, rising tariff risks keep safe-haven flows intact.

XAU/USD Supported by Technical Momentum and Policy Confusion

The breakout above the 100-period SMA and breach of the $3,358–$3,360 zone was pivotal, triggering algorithmic buying and drawing new inflows from momentum traders. Near-term resistance at $3,400 is now being tested, with dip buying emerging near $3,326 and $3,300. A decisive break of $3,282, however, would challenge this trend, exposing the metal to a slide toward $3,248. Despite this, XAU/USD remains bid amid rising tariffs, Middle East conflict, delayed rate cut bets, and shaky risk sentiment.

Verdict: Bullish Bias on Gold (XAU/USD) — Buy on Dips Above $3,300

All fundamental pillars—tariff escalation, geopolitical tension, policy ambiguity, and technical setups—are aligned in favor of gold upside. While the Fed’s reluctance to ease limits runaway moves, the floor remains strong above $3,300.

Gold (XAU/USD) is a Buy with accumulation favored above $3,300, targeting $3,500, $3,550, and $3,600 on breakout continuation. Risk should be managed with stops below $3,245. If macro risk remains elevated and inflation persists, gold may see a historic run toward new all-time highs.

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