Gold retreats from two-week high as improving sentiment curbs safe-haven demand

• Gold pulls back from a two-week high, trading near $3,350, amid risk-on sentiment and a modest rebound in US Treasury yields.
• US Treasury yields and the US Dollar remain broadly pressured, limiting downside in the Gold as Fed rate cut bets gain traction.
• Market pricing reflects a 92% chance of an interest rate cut in September.

Gold (XAU/USD) is drifting lower on Tuesday, giving back some of the gains after hitting a two-week high on Monday. The yellow metal is having a tough time pushing higher as investors lean into riskier assets, and a modest rebound in US Treasury yields from a one-month low is also weighing on sentiment.

Still, the pullback is shallow thanks to growing bets that the Federal Reserve (Fed) will cut interest rates in September, keeping both the US Dollar and Treasury yields under pressure and thereby limiting the downside in Gold.

At the time of writing, XAU/USD is ticking lower, hovering around $3,350 during European trading hours, down 0.60% on the day.

Investors are turning their attention to trade-related headlines, particularly developments surrounding US tariffs, which could inject fresh volatility into global markets.

On the data front, it is a relatively quiet day. The US ISM Services Purchasing Managers Index (PMI) and S&P Global Composite PMI are on deck. While they might spark some short-term moves, these are unlikely to shift expectations around the Fed's next move in September.

The broader market tone remains risk-on, limiting Gold's safe-haven appeal for now.

Markets across regions have rebounded strongly from last week's losses. The MSCI All-Country World Index snapped a six-day losing streak, while the MSCI Asia Pacific Index climbed 0.6%. Japan's Nikkei 225 gained 280 points on Tuesday. European stocks are also extending gains for the second straight session, with both the STOXX 50 and STOXX 600 up around 0.4%. Meanwhile, the FTSE 100 is trading near record highs, pushing toward the 9,150 mark. On Wall Street, major indices staged a sharp rebound on Monday. The S&P 500 surged 1.5%, ending a four-day losing streak, while the Dow Jones jumped 585 points and the Nasdaq Composite rose 1.9%.

Market optimism is being fueled by expectations that the Fed may resume cutting interest rates as early as September, following last week's soft US jobs report. According to the CME FedWatch Tool, markets are now pricing in a 92% probability of a rate cut at the September monetary policy meeting. These dovish expectations are keeping US bond yields and the US Dollar capped, which continues to act as a cushion for Gold prices despite near-term headwinds.

Market movers: US yields rebound modestly after hitting one-month lows, Dollar finds footing

• US Treasury yields fell to fresh one-month lows on Monday, extending Friday's slide as weak Nonfarm Payrolls (NFP) and sharp downward revisions fueled a bond rally. The 10-year yield dropped 6 bps to close at 4.19%, after hitting a high of 4.25%, while the 30-year fell 8 bps to settle at 4.78%, down from 4.86%. On Tuesday, yields have rebounded modestly, with the 10-year rising 3 basis points to 4.21% from an open of 4.18%, and the 30-year climbing 2 basis points to 4.80% from 4.78%.
• The US Dollar Index (DXY), which gauges the value of the Greenback against a basket of six major currencies, is somewhat stabilizing after falling from a two-month high of 100.26 on Friday. The index is trading strongly against its major peers on Tuesday, hovering around 99.00, though it remains pinned near a one-week low.
• According to ANZ, total gold demand rose to 2,384 tonnes in H1 2025, marking the strongest first-half performance since 2013. A sharp pickup in investment demand, driven by both retail and ETF inflows, offset weakness in jewellery consumption. Investment demand topped 1,000 tonnes, with Gold-backed ETFs seeing net inflows of 397 tonnes, reversing last year's outflows, while retail investment climbed 38 tonnes to 636 tonnes.
• Despite an 18% year-over-year drop in jewellery demand to 782 tonnes, macro headwinds such as slowing global growth, sticky inflation, geopolitical tensions, and tariff risks are reinforcing Gold's appeal as a safe-haven asset. While central bank buying slowed to 415 tonnes in H1, ANZ expects annual purchases to remain robust in the 900-950 tonne range for 2025, providing continued support for Gold prices.
• San Francisco Fed President Mary Daly pushed back slightly against aggressive rate cut pricing. While acknowledging that the labor market is softening, she noted in a Reuters interview that it is "not precariously weak," and warned that further weakening would be unwelcome. Daly added that she was willing to wait another cycle in July but emphasized the Fed "can't wait forever." She also noted there is still a lot of uncertainty over whether a September rate cut would be appropriate, but played down concerns that tariffs are creating persistent inflation pressures. Markets took Daly's comments as further evidence that the Fed might be ready to cut rates in September.
• Alongside the ISM Services PMI and S&P Global Composite and Services PMIs, Tuesday's US calendar features updates on the Goods and Services Trade Balance and Redbook retail sales. While not blockbuster releases on their own, the data could offer additional clues on underlying economic momentum, particularly in consumption, services activity, and external trade.

Technical analysis: XAU/USD clings to support near $3,350

Gold (XAU/USD) is having trouble building on last week's rebound, with prices currently hovering near $3,350.

After breaking below an ascending triangle pattern and briefly hitting a one-month low last week, the metal found support just above the 100-day Simple Moving Average (SMA), suggesting bears still lack conviction.

The metal is now trading slightly above the 50-day SMA, which acts as immediate support, followed by the 100-day SMA. If prices break lower, the next targets could be around $3,275 and $3,200.

The Relative Strength Index (RSI) on the daily chart sits in neutral territory around 51, pointing to a lack of clear momentum. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator remains below the zero line, but a flattening histogram hints that bearish pressure may be easing.

On the upside, if bulls can reclaim the broken triangle base and push decisively above $3,380, a move toward $3,450 is possible, potentially putting all-time highs back in sight.