Gold prices touched and then retreated from multi-week highs in early Tuesday trading, currently holding just above the $3,350 level. Signs of fatigue are beginning to emerge in financial markets following a turbulent first half of the year marked by heightened volatility. The drivers behind this instability remain largely in place — persistent uncertainty surrounding global tariffs, elevated geopolitical tensions, a subdued economic outlook, and growing fiscal concerns in the United States. In this context, gold prices are expected to find continued support above the $3,300 level. However, gains may be capped in the near term by a renewed appetite for risk, as markets price in the possibility that the Trump administration's more extreme tariff threats may not fully materialise. Another key influence on the outlook for gold is the behaviour of the US dollar, which remains closely tied to expectations around the Federal Reserve's interest rate trajectory. Market consensus currently anticipates at least two 25 basis point rate cuts before the end of the year. However, greater clarity is unlikely before the summer, when the current uncertainty's real economic impact may manifest in slower growth and rising prices. Should this scenario unfold, it could herald a return to elevated market volatility in the second half of the year — a backdrop that would likely favour further upside for gold.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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