Gold is up 0.4% today but that only helps to recover some poise after declines in the past two days. But even then, this isn’t taking gold any place to where it hasn’t been over the last two months. And in July itself, it has been mostly sideways trading for the precious metal:
Gold (XAU/USD) 4-hourly chart
That continues with what we mostly saw in June as well, with price action just weaving in and around the $3,300 mark. At least last month, buyers did try to make an attempt to break above $3,400 but there hasn’t been that same enthusiasm this time around.
A stronger dollar is in part helping to limit the appetite among gold buyers but I’d take that as a good thing in some sense. That even with the dollar pushing back against other major currencies and what not, gold is still holding its ground and is up a little over 1% since the end of May.
I would argue that speaks to the resilience in gold after the run up since January looks to be cooling off a little, ironically as we get into summer.
So, what’s next for gold?
The next key development to watch out for is whether or not Trump will actually deliver on his tariff threats for once. Otherwise, the TACO playbook should continue to bite at the dollar amid more uncertainty and discombobulation. The policy incoherence that is laid out is something that markets are still trying to get used to, or has it already?
That is also a consideration to be mindful of, that is if markets are already starting to be numb towards Trump’s tendency to fold.
But in the event that Trump does deliver on some of his tariff threats, gold is still one that could manage to stay afloat if markets are having to deal with more chaotic elements in play. Central bank buying and ETFs playing catch up are still two big elements that continue to underpin the precious metal in the bigger picture. And until those drivers take a backseat, it will be tough to fight the dip buying mentality in gold since last year already.
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