Gold Rebounds from 3-Week Low; Long-Term Demand Strong

Gold prices rebound from a 3-week low, with long-term demand expected to remain strong

Gold prices inched higher on Tuesday, rebounding from near three-week lows as easing global trade tensions reduced immediate safe-haven demand ahead of a pivotal U.S. Federal Reserve policy decision.

U.S.-EU Trade Deal Weakens Gold’s Appeal

Bullion has declined for four straight sessions, pressured by recent progress in U.S. trade negotiations. Over the weekend, the U.S. and European Union reached a framework agreement, softening trade tensions and dampening short-term demand for traditional safe-haven assets like gold.

The U.S. Dollar Index surged over 1% on Monday and remains elevated, making dollar-denominated commodities such as gold more costly for foreign buyers.

Still, despite recent softness, gold is expected to maintain strength above the $3,000/oz mark. According to a Reuters poll of 40 analysts and traders, the median forecast for 2025 stands at $3,220 per troy ounce, up from $3,065 in a previous survey. The 2026 projection also climbed to $3,400 from $3,000.

Persistent global uncertainties and fiscal challenges continue to support gold’s long-term appeal, with analysts citing central banks’ strategic diversification away from the U.S. dollar as a key driver behind the ongoing rally.

Focus Turns to Fed Meeting

Attention now shifts to the Federal Reserve’s two-day policy meeting, with a rate decision expected Wednesday. While rates are likely to remain unchanged, markets are keenly watching for any forward guidance. This anticipation has kept gold trading in a narrow range, as investors remain cautious.

Traders are also awaiting a series of U.S. economic indicators later this week, including Q2 GDP, PCE inflation data, and the monthly jobs report.