Over the weekend, a trade agreement was reached between the United States and the European Union, which added to the optimism sparked by the recent U.S.–Japan deal and eased fears of a potential global trade war. In the coming days, senior officials from the U.S. and China, including U.S. Treasury Secretary Scott Bessont and Chinese Vice Premier He Lifeng, are expected to resume negotiations to address longstanding economic disputes and potentially extend the current truce by three months.

On Monday, the U.S. dollar surged sharply—its strongest gain since early May—adding nearly 1.5% in July and marking its first monthly positive performance in a year. As a result, the price of gold fell to a three-week low.

However, dollar bulls have temporarily paused further buying ahead of signals from the Federal Reserve regarding its interest rate path. These signals will come following the conclusion of the FOMC's two-day meeting, which begins on Tuesday and concludes on Wednesday. The Fed is expected to leave rates unchanged. Therefore, the main focus will be on the accompanying statement and Fed Chair Jerome Powell's press conference, which should provide insight into the outlook for monetary policy.

Meanwhile, U.S. President Donald Trump has given Russia a new deadline—10 to 12 days—to show progress in resolving the conflict in Ukraine. He warned of severe sanctions if Russia fails to act, stating that his administration would impose 100% secondary tariffs on countries continuing to purchase Russian exports. These threats are keeping geopolitical tensions elevated and supporting demand for safe-haven assets such as gold.

Today, for better trading opportunities, traders should wait for key U.S. economic data, including the JOLTS job openings report and the Conference Board's Consumer Confidence Index, both due later in the North American session. These releases could affect the dollar's exchange rate and, in combination with trade news and broader market sentiment, create short-term opportunities for commodities like gold.

Technical Outlook

From a technical perspective, the Relative Strength Index (RSI) has begun to show a downward trend, suggesting a likelihood of further price declines. A sustained break below the key psychological level of $3300 would confirm bearish sentiment, making the XAU/USD pair vulnerable to an accelerated drop toward the $3280 support level. Below that, the 100-day simple moving average (SMA) becomes the critical pivot. A decisive break below the 100-SMA would serve as a new trigger for bears.

On the other hand, any significant recovery attempt is likely to face immediate resistance around $3342 at the 50-SMA. A move above this level could lift the metal to $3371. Strength beyond this point would likely trigger a short-covering rally, allowing XAU/USD to retest the psychological level of $3400. The positive momentum could persist but would likely be capped near $3434–3435. A sustained move above $3435 would negate short-term bearish trends and open the door for further gains.