Gold breaks out of its range as Dollar falls and yields sink amid Fed turmoil and trade tensions

Gold came roaring back at the start of the week, breaking through the long-standing resistance around $3,400 per ounce after weeks of tight consolidation. This breakout wasn’t just about technical momentum or speculative positioning—it was the product of a complex macro backdrop led by eroding trust between the White House and the Federal Reserve, and a ticking clock on looming tariff threats with the August 1 deadline fast approaching. 

During Monday’s session, XAU/USD surged over 1%, capitalizing on a sharp drop in the U.S. dollar, which slipped below the 98.00 level on the DXY index. At the same time, 10-year Treasury yields fell below the 2% mark, with real yields retreating as traders digested growing concerns over political interference in central bank policy and a deteriorating trade outlook. 

Reports out of Washington suggested friction inside the administration over Fed Chair Jerome Powell’s future. The Wall Street Journal noted Treasury Secretary Bessent had advised President Trump against firing Powell, citing potential fallout over Fed credibility. Trump denied such plans in a post on Truth Social, calling the speculation “dishonest,” yet the uncertainty lingers—especially with lawmakers like Rep. Anna Paulina Luna formally accusing Powell of perjury over separate Congressional testimonies. 

On the trade front, Europe isn’t standing still. According to Bloomberg, EU diplomats are moving swiftly to finalize a retaliatory package targeting $72 billion worth of U.S. exports if no deal is reached before August 1. The proposed tariffs span major U.S. sectors, from automobiles and aircraft to bourbon and digital services, painting a picture of escalating trade friction that’s likely to remain front and center in market sentiment. 

Economic data from the U.S. added to the mixed outlook. While consumer confidence showed modest improvement, inflation prints remained elevated, with June’s CPI edging closer to 3%. With this week’s U.S. economic calendar relatively light—featuring housing data, jobless claims, and durable goods orders—the primary market focus remains on monetary policy and the Fed’s independence in the face of mounting political pressure. 

Technically speaking, gold finally snapped out of its five-week sideways pattern, breaking the $3,350 cap and peaking at $3,401—a five-week high. Momentum indicators are supportive, with the 14-day RSI pushing toward 60, suggesting a continued bullish tilt. Should XAU/USD maintain its close above $3,400, the next upside test is likely the June high at $3,452, followed by a potential retest of the all-time high near $3,500. 

Conversely, failure to hold these gains could send prices back toward former support levels at $3,350 and $3,300. Below that, the June 30 low at $3,246 and the 100-day SMA around $3,218 come into focus. 

In the bigger picture, gold remains a barometer of global anxiety—reflecting rising trade tensions, internal policy discord in the U.S., and shaken confidence in central bank autonomy. With so many variables in flux, gold continues to attract attention not just as a hedge, but as a proxy for the growing unease in financial markets.