Gold Price Outlook: XAU/USD threatens critical support as US Dollar holds gains

NEW YORK (July 25) Gold is trading lower on Friday as risk appetite improves, trade tensions ease, and the US Dollar firms.
At the time of writing, XAU/USD is trading below $3,330, down over 1% on the day, pressured by rising US Treasury yields and fading demand for safe-haven assets.

Friday’s US Durable Goods Orders report showed a 9.3% decline in June, better than the 10.8% drop expected but still a sharp reversal from May’s 16.5% surge.

The data, which tracks new orders for long-lasting manufactured goods like vehicles and machinery, is a key proxy for business investment and broader economic momentum. While the headline print was less negative than forecast, the underlying weakness reinforced concerns about slowing growth.

However, with risk appetite improving, equity markets stable, and traders focused on upcoming central bank decisions and trade negotiations, the softer data failed to meaningfully shift sentiment or revive safe-haven demand for Gold.

Gold remains sensitive to trade talks as risk sentiment shifts

The easing of global trade tensions has been a central driver of this week’s pullback in Gold. US President Donald Trump has signaled that countries offering greater access to US markets could receive preferential tariff treatment, citing the recently concluded Japan trade agreement as a model for ongoing negotiations with the European Union.

Under the proposed deal, most EU goods would face a 15% baseline tariff, a notable reduction from the 30% rate scheduled to take effect on August 1 if no agreement is reached.

Attention is also turning to next week’s high-stakes US–China trade talks. Treasury Secretary Scott Bessent will meet Chinese Vice Premier He Lifeng in Stockholm between Sunday and Tuesday to discuss extending the current tariff truce, which is set to expire on August 12.

Under the current agreement, tariffs on US imports of Chinese goods are subject to a 55% total tariff rate, while Chinese imports of US goods face a levy of 10%. The 55% tariff rate consists of a 10% baseline tariff, a 20% "fentanyl" tariff, and a 25% Section 301 tariff. The upcoming meetings in Stockholm will focus on potentially extending this truce and addressing other economic issues.

Should talks collapse, tariff rates would revert to 145% on Chinese imports and 125% on US exports, a development that could trigger a sharp deterioration in risk sentiment and reignite safe-haven demand for Gold.

Meanwhile, Chinese Commerce Minister Wang Wentao has expressed support for improving trade ties with the US, noting the mutual interest in restoring long-term economic stability. His comments helped ease market fears earlier in the week, reinforcing the broader risk-on environment.

Gold daily digest market movers: US employment data and Fed expectations keep pressure on Bullion

• On Thursday, US Initial Jobless Claims fell to 217,000, marking a sixth consecutive weekly decline and the lowest level since April. The report reinforced the strength of the US labor market and reduced pressure on the Fed to act quickly on rate cuts. 
• A resilient jobs backdrop supports higher yields and the US Dollar, putting pressure on non-yielding assets, such as Gold.
• According to the CME FedWatch Tool, markets are now pricing in a 62.3% probability of a 25-basis-point rate cut in September, while the likelihood of no change stands at 36.1%. Although at least one rate cut remains priced in this year, recent Fed commentary suggests growing caution. 
• The Minutes of the June Federal Open Market Committee (FOMC) meeting revealed that most officials were hesitant to ease monetary policy, citing inflation risks driven by higher import costs, especially in the context of unresolved trade disputes.
• This makes the outcome of ongoing US-EU and US-China trade negotiations particularly important. A failure to reach new agreements could reintroduce tariff-related price pressure and complicate the Fed’s policy path. In such a scenario, investors could return to Gold as a hedge against renewed market volatility and inflation.

FXStreet