Gold firms as Trump's tax bill, tariff risks fuel safe-haven demand
Gold (XAU/USD) is trading higher on Friday as news aboutUnited States(US) President Donald Trump’s passage of the “Big, Beautiful, Bill” filters through markets. With markets closed in the US in celebration of Independence Day, XAU/USD is trading above $3,330 at the time of writing.
Liquidityis expected to remain light in the US following the holiday weekend, which could make bullion sensitive to developments that may influence risk sentiment.
Risk appetite improved this week, following reports that the US was making progress in trade talks ahead of the July 9 deadline. However, the mood has shifted slightly on Friday as tariff uncertainty and President Trump’s threats to send letters to nations dictating the amount that they will pay to do business with the US.
On Friday, Trump stated that “We’re probably going to be sending some letters out, starting probably tomorrow, maybe 10 a day to various countries saying what they’re going to pay to do business with the US,” according to Reuters.
“They’ll range in value from maybe 60% or 70% tariffs to 10% and 20% tariffs,” was the range that Trump gave Bloomberg reporters.
Looking ahead, market focus will shift to ongoing trade negotiations, which could introduce fresh volatility. If trade talks deteriorate or geopolitical tensions rise, investors may rotate into safe-haven assets like Gold.
Additionally, the proposed “Big, Beautiful, Bill” was passed by the House of Representatives late Thursday following the release of crucial economic data from the US.
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Gold technical analysis: XAU/USD price compression signals breakout potential above $3,400
Gold (XAU/USD) is currently consolidating within a symmetrical triangle pattern, signaling potential breakout as price action tightens.
The yellow metal is trading between support at the 50-day Simple Moving Average (SMA) near $3,321 and resistance at the 20-day SMA of $3,350, indicating short-term indecision.
Above the 50-day SMA, key resistance sits near the 23.6% Fibonacci retracement of the April low to the April high move at $3,371. If bulls recover, the next big level of psychological resistance sits at $3,400.
In contrast, below the 20-day SMA, immediate support lies at the $3,300 psychological level, followed by the 50%Fibonaccilevel at $3,328.
The Relative Strength Index (RSI) is flattening around the neutral 50 mark, signalling a lack of momentum and reinforcing the range-bound behavior.
Gold (XAU/USD) dailychart
Gold FAQs
Why do people invest in Gold?
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Who buys the most Gold?
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
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