Gold (XAU/USD) edged lower on Tuesday after two consecutive days of gains, but the safe-haven metal remains underpinned by lingering geopolitical and monetary policy concerns. The ongoing uncertainty ahead of the looming August 1 tariff deadline set by US President Donald Trump continues to lend underlying support.
Market attention remains fixed on high-stakes trade negotiations between the United States and the European Union. With Trump threatening to impose a 30% tariff on EU exports if no agreement is reached by the deadline, tensions have escalated. According to Reuters, EU officials are actively preparing broader retaliatory measures, signaling a growing risk of a breakdown in talks.
Fed Independence in the Spotlight
Adding to investor unease are concerns about the Federal Reserve’s autonomy. US Treasury Secretary Scott Bessent criticized what he described as the Fed’s “mandate creep” into non-monetary policy areas, calling for a sweeping review of its activities and governance structure. Meanwhile, President Trump’s repeated criticism of Fed Chair Jerome Powell for not cutting interest rates has fueled fresh speculation about Powell’s job security.
Central Bank Decisions in Focus
Looking ahead, the European Central Bank (ECB) is widely expected to hold its benchmark interest rate steady at 2.0% when it meets on Thursday, following a series of previous rate cuts. However, investor focus is already turning toward the US Federal Reserve’s policy decision scheduled for next week, where the future direction of interest rates remains uncertain amid political pressure and shifting economic indicators.
Outlook
While gold is experiencing a modest pullback, the broader backdrop of trade tensions and questions surrounding central bank independence continues to support its appeal as a safe-haven asset. A break above the key $3,400 level could renew bullish momentum if global uncertainties persist.
