XAUUSD is breaking the higher low area of the uptrend channel
#XAUUSD Analysis Video
Gold prices saw a slight pullback on Friday as some traders booked profits after recent gains. Despite this dip, the precious metal held onto much of its strength, supported by ongoing global trade tensions and growing expectations that the US Federal Reserve will cut interest rates in September.
While the market mood was generally upbeat and the US Dollar managed a modest rebound, these factors weren’t enough to send gold prices sharply lower. Instead, the yellow metal found stability, as safe-haven demand remained intact due to persistent uncertainties in the global economy.
Profit-Taking Pulls Gold Lower, But Bears Remain Cautious
After touching over a two-week high earlier in the day, gold slipped slightly as investors locked in gains from its recent rally. The retreat was largely due to an improvement in risk sentiment, which saw Asian stock markets climb for the fifth straight day, aiming for their best week since June.
A modest recovery in the US Dollar also contributed to the pullback, making gold a bit more expensive for foreign buyers. However, the selling pressure lacked conviction, with most market participants reluctant to take aggressive bearish positions.
The hesitancy among sellers is driven by lingering concerns about global trade disputes. Fresh moves from the US government, including new tariffs, have kept uncertainty high and provided an underlying cushion for gold prices.
Trade Tensions Keep Investors on Edge
Global trade tensions were back in the spotlight this week, adding fuel to safe-haven demand. US President Donald Trump’s announcement of additional tariffs on Indian imports — raising them to 50% — caught the attention of markets. This move came as a “punishment” for India’s purchase of oil from Russia and was followed by threats of tariffs on semiconductors and pharmaceuticals.
These escalating measures have revived fears of broader economic disruption. Investors are now more cautious about the potential fallout of a prolonged trade war, and gold, as a traditional safe-haven asset, has benefited from this caution.
Adding to the bullish undertone, official data from Thursday revealed that China’s central bank extended its gold purchases for the ninth consecutive month in July. Such consistent buying from a major global player highlights ongoing confidence in the metal as a store of value.
Fed Rate Cut Bets Offer Strong Support
Another significant driver keeping gold supported is the growing expectation that the US Federal Reserve will resume its interest rate cuts in September. This sentiment strengthened after recent economic data painted a softer picture of the US labor market.
Last Friday’s US Nonfarm Payrolls report triggered speculation about a potential policy shift, and fresh jobless claims data this week added to that view. The US Labor Department reported that new applications for unemployment benefits climbed to 226,000 for the week ending August 2 — the highest level in about a month.
XAUUSD is moving in a box pattern
According to CME Group’s FedWatch Tool, traders are now pricing in more than a 90% chance of a rate cut at the next Fed meeting. Many also expect at least two quarter-point cuts before the end of the year.
Lower interest rates generally weaken the US Dollar and reduce the opportunity cost of holding non-yielding assets like gold, making them more attractive to investors.
Political Developments Add a Twist
Adding another layer to the mix, President Trump nominated Stephen Miran, the current Chairman of the Council of Economic Advisers, to serve as a Federal Reserve Governor until early 2026. Additionally, Trump has reportedly shortlisted candidates to replace current Fed Chair Jerome Powell.
Such political developments could influence monetary policy direction and market sentiment, indirectly impacting gold prices. For now, however, traders seem more focused on the upcoming Fed decision and speeches from key policymakers.
What to Watch Next
With no major US economic data releases on the immediate horizon, investor attention is likely to turn toward public remarks from influential Fed officials. Any hints about the timing and scale of future rate cuts could move both the Dollar and gold prices.
Meanwhile, developments in the ongoing trade disputes will remain a key factor to watch. New announcements or policy shifts could quickly alter market sentiment and safe-haven demand.
XAUUSD is moving in an Ascending Triangle pattern
Summary
Gold prices may have eased slightly on Friday, but the overall outlook remains supported by a combination of global trade tensions and strong expectations for a September rate cut from the US Federal Reserve. While profit-taking and a modest Dollar rebound applied some short-term pressure, safe-haven demand and central bank buying have helped keep the metal resilient.
The coming weeks could be pivotal for gold, as both political developments in the US and fresh economic signals from the Fed have the potential to drive volatility. For now, the precious metal appears to have a solid foundation, with cautious investors keeping one eye on trade headlines and the other on the Fed’s next move.
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