Gold stalls despite elevated trade tensions and rising concerns over Fed independence

• Gold remains supported as US-EU trade talks near August 1 deadline and tariff threats persist.
• The US Dollar faces additional pressure due to rising concerns over Fed independence.
• XAU/USD bulls fail to clear $3,400, consolidation persists after minor pullback.

Gold (XAU/USD) is edging lower after a sharp rally on Monday. Trade tensions and concerns about the Federal Reserve's (Fed) independence continue to lend support through safe-haven demand.

The precious metal is hovering just below the $3,400 level at the time of writing on Tuesday, facing resistance to further gains. Recent investor flows into alternative assets, such as Bitcoin and US equities, are capping the upside momentum.

Trade talks and Fed independence remain in focus, limiting Gold's decline

The likelihood of a trade deal between the EU and the US before the August 1 deadline is fading, and investors are growing increasingly wary. 

This uncertainty, along with broader trade tensions involving key US partners, remains a major theme supporting Gold's appeal as a safe-haven asset.

Adding to market unease are renewed concerns about the Fed's independence. US Treasury Secretary Scott Bessent spoke with CNBC on Monday and commented on the matter. 

He suggested that it may be time to "examine the entire institution and whether they've been successful." He has also proposed a review of the Fed's non-monetary functions, citing issues like "mission creep" and cost overruns in building renovations. 

The Fed's independence from political influence is a key pillar of the central bank's credibility. When that independence is called into question, investors fear that monetary policy could become motivated by factors other than data-driven considerations, weakening confidence in the US Dollar.

While Gold traditionally benefits from economic uncertainty and risk aversion, recent developments have limited its upside. 

Rising institutional interest in Bitcoin, amid improving regulatory clarity, has drawn some safe-haven flows away from the precious metal. 

At the same time, US equities, particularly tech stocks, remain attractive to investors anticipating Fed interest rate cuts. 

These competing inflows into alternative assets are acting as a headwind for bullion, even as uncertainty remains elevated.

Daily digest market movers: US-EU trade talks near deadline as tariff threats persist

• Talks between the United States and the European Union have dragged on in recent weeks, with little sign of real progress. US President Donald Trump has floated the idea of imposing a sweeping 30% tariff on most EU imports as part of his push to narrow the trade deficit. The US imports more goods from the EU than it exports, though when it comes to services, the opposite holds true. 
• Trade negotiations are currently underway in Brussels and Washington as officials work to finalize proposals and fallback strategies in a final effort to prevent a sharp escalation in transatlantic tensions. The talks bring together senior representatives from the European Commission's trade team, led by Trade Commissioner Maroš Šefčovič and US counterparts including Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer.
• The European Union is preparing a package of retaliatory tariffs, in case negotiations don't succeed, targeting key American exports, including digital services, aerospace products, and bourbon.  Even if a deal is reached, the US plans to keep baseline tariffs of 15-20% on EU goods, along with sector-specific levies on steel, copper and auto parts. Trump has also indicated that tariffs on pharmaceuticals and semiconductors may be implemented soon. The economic uncertainty could support Gold demand as a safe-haven asset.
• Over the weekend, Howard Lutnick struck a more optimistic tone regarding US-EU talks during an interview with CBS News. "These are the two biggest trading partners in the world, talking to each other. We'll get a deal done. I am confident we'll get a deal done," he said. Still, Lutnick made it clear that there's no room for delays. "That's a hard deadline--so on August 1, the new tariff rates will come in."
• The Fed is currently in a blackout period prior to the July 30 interest rate decision, and no further comments on monetary policy are expected to be provided by Fed officials until then. However, despite ongoing criticism from the US president, who has called for the resignation of Fed Chair Jerome Powell, the majority of the central bank's members have remained reluctant to cut rates until the clear inflation pressures from tariffs are evident. 

Gold technical analysis: Bulls fail to clear $3,400, consolidation persists after minor pullback

On the technical front, Gold is showing signs of consolidation after being rejected at the $3,400 level, an important psychological and resistance zone.

The metal continues to trade above the symmetrical triangle pattern, indicating that the breakout remains intact despite a minor pullback. For bullish continuation to be possible, Gold needs a clear hold above $3,400 and a move above the June 16 high of $3,452 to open the door then for a potential retest of the April 22 record high of $3,500.

Gold daily chart

In contrast, key support is seen near the 23.6% Fibonacci retracement level of the April low-high move at $3,372, with a move lower bringing the 50-day Simple Moving Average (SMA) at $3,330 back into play. The next supports are currently provided by the $3,300 psychological level and the 50% Fibonacci retracement at $3,228, although a break below $3,292 would suggest a deeper correction.

The Relative Strength Index (RSI) at 58 reflects moderate bullish sentiment, though momentum follow-through is currently lacking.