Gold (XAUUSD) Price Forecast: Bullion Gains on Weak Dollar and Trade Tensions Ahead of Fed

Safe-Haven Demand Lifts Bullion as Traders Eye Fed Decision

Gold is trading higher on Tuesday, rebounding sharply as it clears a key pivot level at $3351.08, now acting as support. The move ends a seven-day slide and signals renewed buying interest ahead of the Federal Reserve’s rate decision. With bullion climbing to a two-week peak, market focus is firmly on policy commentary from Chair Jerome Powell, while safe-haven demand driven by escalating trade tensions continues to underpin prices.

At 12:51 GMT, XAU/USD is trading $3387.66, up $53.46 or +1.60%.

Gold Firms as Tariff Tensions Reignite Demand

U.S. President Donald Trump’s fresh wave of tariff threats—including a 100% levy on foreign-produced films and upcoming pharmaceutical tariffs—has reignited market concerns, sending investors back into gold. Bullion, often favored during periods of political and financial uncertainty, surged to $3,287 overnight, buoyed by demand from China following the end of its national holidays. The renewed bid lifted gold closer to last month’s all-time high of $3,500.20, which had been supported by robust central bank buying and broader tariff war fears.

Fed in Focus as Rates Expected to Hold Steady

The Federal Reserve is widely expected to keep interest rates unchanged on Wednesday. However, traders are closely watching for any signals on rate cuts later this year, with current pricing indicating 75 basis points of easing, possibly beginning in July. Treasury yields remain range-bound, with the 10-year yield last seen at 4.353% and the 2-year at 3.822%. A dovish tone from Powell could further support gold, as lower interest rates reduce the opportunity cost of holding non-yielding bullion.

Dollar Weakens on Trade Deal Doubts

The U.S. dollar came under pressure on Tuesday, losing ground to the yen, euro, and pound. Market optimism around potential U.S. trade agreements faded, contributing to a decline in the dollar index. Meanwhile, emerging Asian currencies posted gains, signaling possible capital inflows into the region. The yuan also strengthened, hinting at a shift that traders believe may be linked to ongoing trade negotiations. A weaker dollar generally supports gold by making it cheaper for holders of other currencies.

Gold Prices Projections: Bullish Setup Eyes Record Retest

With gold reclaiming ground above $3351.08, technical momentum suggests a bullish near-term outlook. A sustained move higher sets up a possible retest of the record $3500.20 level. Conversely, a failure to hold this support risks a pullback into the $3228.38–$3164.23 retracement zone. However, safe-haven demand, weak dollar conditions, and potential Fed dovishness all skew the bias to the upside. Gold remains well-supported for another leg higher if Powell hints at future rate cuts.

More Information in our Economic Calendar.