Gold (XAUUSD) Price Forecast: Safe-Haven Demand Cools After U.S.-Japan Trade Deal

Gold Slips as Traders Book Profits Ahead of Fed and Trade Headlines

Gold prices edged lower on Wednesday, retreating from an early session push to $3439.04 as bulls failed to clear the June 16 high at $3451.53. The hesitation just below record territory reflects a growing reluctance among investors to chase the rally so close to the all-time high at $3500.20.

At 14:48 GMT, XAU/USD is trading $3414.48, down $17.08 or -0.50%.

Technical support is building around $3374.42, with stronger demand anticipated at $3347.97 and near the 50-day moving average at $3336.40, which remains a key structural level holding the market up.

U.S.-Japan Trade Agreement Dents Safe-Haven Demand

The pullback in gold followed news of a U.S.-Japan trade agreement that reduced tariffs on autos and other goods. The deal helped ease some geopolitical tension, curbing safe-haven demand for gold. While the market digested the development as positive for risk assets, silver surged to its highest level since September 2011 on the back of robust industrial demand and ongoing supply tightness.

Nikos Tzabouras, senior analyst at Tradu.com, said the trade agreement may “dampen safe-haven demand” and contribute to continued rangebound trading in gold.

However, he emphasized that broader support for gold remains, driven by a weakening U.S. dollar and rising concerns over Federal Reserve independence and the U.S. debt outlook.

Fed Credibility Back in Focus as Treasury Yields Climb

Bond yields ticked higher after U.S. Treasury Secretary Scott Bessent reassured markets that Fed Chair Jerome Powell would not be forced out, helping calm political uncertainty.

 

The benchmark 10-year Treasury yield rose over 4 basis points to 4.384%, while the 2-year yield climbed to 3.857%. A clearer stance from President Trump, who said Powell is “going to be out pretty soon anyway,” briefly unsettled markets before Bessent’s remarks restored some calm.

Higher yields tend to weigh on gold by increasing the opportunity cost of holding the non-yielding metal. With the bond market shifting focus back to the Fed’s interest rate stance, the pressure on gold prices could persist in the near term.

Attention now turns to the Fed’s July 29–30 policy meeting, with markets expecting no rate move. Still, political pressure on Powell and the FOMC remains a key variable. Traders are also watching inflation closely, with June CPI up to 2.7% year-on-year from 2.4% in May.

Gold Prices Forecast: Near-Term Pullback, But Bullish Underpinning Holds

While profit-taking, improved risk sentiment, and higher yields are pressuring gold short-term, the longer-term outlook remains constructive.

Key support zones between $3374.42 and $3336.40 are expected to attract dip-buyers.

Persistent dollar weakness, central bank gold accumulation, and concern over Fed autonomy could push prices higher once current pressure eases.

As long as gold holds above its 50-day average, the bullish bias remains intact.

More Information in our Economic Calendar.