Gold Outlook: Tariff deadlines loom as Fed Chair Powell takes the stage

Since our last report Gold’s price, has moved higher and is currently above $3404 per troy ounce. In today’s report we are to discuss mainly fundamental issues and we intend to end the report with a technical analysis of Gold’s daily chart.

Fed riddles continue

The narrative surrounding the Federal Reserve has continued to tantalize the markets. In particular, we are referring to the recent reports by media outlets that President Trump had asked GOP lawmakers if he should fire Fed Chair Powell.

Specifically, CBS reports that Trump having stated to reporters in the Oval Office that “I talked to them about the concept of firing him. I said, ‘What do you think?’ Almost all of them said I should. But I’m more conservative than they are” showcasing in our opinion the President’s attempt to gauge the mood and possible support he would receive from GOP lawmakers should he move forward with the firing of the Fed Chair.

In turn, the possibility of the Fed’s independence being threatened and the incumbent Fed Chair being fired could lead to heightened uncertainty in the market’s as such a move could set a dangerous precedent.

Moreover, such a scenario could potentially aid gold’s price given its status as a safe haven asset. Furthermore, the attacks on the Fed Chair have continued with Rep. Anna Paulina Luna, (R-Fla) referring Fed Chair Powell to the DOJ for criminal charges and accusing him of two specific instances of lying under oath.

Nonetheless, Fed Chair Powell is set to speak later on today on a conference on bank regulation and given the recent attacks on the Fed, the Fed Chair’s speech today could gather significant attention as any indications towards his future could influence the dollar and thus gold, given its inverse relationship with the dollar.

In our opinion, the Fed Chair may attempt to refrain from commenting on the Fed’s monetary policy decision and on his future as the Fed Chair, yet should any of those two scenarios occur we may see heightened volatility in the markets

1  of August deadline nears as nations sharpen their knives

The US’s 1  of August tariff deadline is looming and with just over one week to go until they go into effect, some nations are still trying to reach a deal with the US. Starting with the EU, the 30% tariff is set to go into effect on the 1  of August but the bloc won’t go down without a fight.

Specifically, according to Reuters, “A growing number of European Union member states, including Germany, are considering using wide-ranging “anti-coercion” measures targeting U.S. services”. In turn the EU’s preparation and talks of the anti-coercion act may be seen either as a tool to be used as leverage in their negotiations with the US prior to the August 1  deadline, or a possible preparation for a prolonged trade battle with the US.

Moreover, attention also turns to China whose deadline is set for the 12  of August and to which Treasury Secretary Scott Bessent has stated per Bloomberg “I tell market participants not to worry about Aug. 12,” which could imply an extension may be on the way.

Nonetheless as the tariff deadlines continue to approach and with a lack of progress being made, concerns by market participants may resurface over the state of the global economy. In turn such concerns could potentially aid the precious metal’s price.

Gold Technical Analysis

XAUUSD 4H Chart

• Support: 3385 (S1), 3240 (S2), 3115 (S3)
• Resistance: 3500 (R1), 3645 (R2), 3790 (R3)

Gold’s price appears to be moving in an upwards fashion after clearing our resistance now turned to support at the 3385 (S1) level.

We opt for a bullish outlook for gold’s price and supporting our case is the upwards moving trendline which was incepted on the 30  of June, in addition to the MACD indicator and our RSI indicator which currently registers a figure close to 60 which tends to imply a slight bullish market sentiment.

For our bullish outlook to continue we would require a clear break above our 3500 (R1) resistance level with the next possible target for the bulls being the 3645 (R2) resistance level.

On the other hand for a bearish outlook we would require a clear break below our 3385 (S1) support level with the next possible target for the bears being the 3240 (S2) support line. Lastly, for a sideways bias we would require the precious metal’s price to remain between our 3385 (S1) support level and our 3500 (R1) resistance line.

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