Gold Breaks $3,400 as Dollar Weakens, Trade Fears Rise

Gold breaks above resistance, boosted by a weaker US Dollar and heightened trade uncertainty

Gold (XAU/USD) extended its rally on Tuesday, fueled by safe-haven demand amid escalating trade tensions and growing concerns over the Federal Reserve’s independence.

The metal is trading above the $3,400 mark at the time of writing, supported by building bullish momentum.

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Trade Uncertainty and Fed Independence Bolster Gold’s Appeal

Hopes for a trade agreement between the EU and the US ahead of the August 1 deadline are diminishing, heightening investor caution. Broader trade disputes involving the US continue to drive demand for safe-haven assets like Gold.

Meanwhile, fresh concerns about the Fed’s autonomy are adding to market jitters. U.S. Treasury Secretary Scott Bessent, speaking with CNBC on Monday, questioned the central bank’s broader functions, suggesting a review of its non-monetary roles and raising the issue of “mission creep” and budget overruns.

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Doubts about the Fed’s independence could undermine trust in its data-driven policy decisions, weakening the US Dollar and indirectly benefiting Gold.

However, while elevated uncertainty typically supports Gold, its upside is being capped by growing institutional interest in Bitcoin, which is gaining from clearer regulatory developments. Additionally, investor enthusiasm for U.S. equities, especially in the tech sector, remains strong amid expectations of rate cuts—limiting further gains in bullion.