Gold Rally Pauses as US-Japan Deal Offers Short-Term Relief, Fed and EU Risks Persist

Gold Rally Cools as Markets Digest US-Japan Deal and Monitor Fed, EU Risks

Gold (XAU/USD) edged lower on Wednesday, retreating from its five-week highs as the US-Japan trade agreement offered temporary relief from global trade tensions. While the deal trimmed immediate risk sentiment, gold remains well-supported above $3,400, reflecting investors’ cautious stance amid persistent global uncertainty.

US-Japan Trade Deal Eases Short-Term Tensions

The agreement between the United States and Japan, which reduces the threat of aggressive tariffs, led to a slight pullback in demand for safe-haven assets like gold. However, the relief appears short-lived, with broader geopolitical risks and unresolved EU-US trade talks keeping investor sentiment defensive.

Fed Uncertainty and EU Risks Provide Support

Despite the modest correction, XAU/USD continues to hold above $3,400, buoyed by:

• Ongoing Federal Reserve policy uncertainty
• Lingering tariff concerns
• Stalled progress in EU-US trade negotiations

These factors collectively support the safe-haven appeal of gold, limiting further downside.

Focus Turns to US Housing Data

Market attention now turns to US economic indicators, particularly the June Existing Home Sales report set for release later Wednesday. Forecasts suggest a slight dip from 4.03 million in May to 4.01 million in June, reflecting the impact of higher borrowing costs on consumer demand.

Existing home sales are crucial in assessing:

• Consumer confidence
• Mortgage affordability
• Overall economic momentum

A weaker-than-expected reading could further boost gold’s safe-haven status.

Outlook: Gold Holds Steady Amid Mixed Signals

While gold’s rally has paused, strong structural support and ongoing macroeconomic uncertainty favor consolidation rather than a sharp reversal. A firmer breakout above recent highs may depend on:

• US inflation data
• Fed rate path clarity
• Progress in EU-US trade relations

Related Tredu Reads:

• Silver Consolidates Near Long-Term Highs
• Fed, Housing Data in Focus for USD