Two Retracement Levels Converge, Creating Strong ResistanceGold is hovering near 3370 amid a wave of tariff-related headlines over the past few days. After Trump’s threats toward Mexico, Canada, and the European Union, gold has been pushing toward higher levels. The latest warning came over the weekend, targeting both the EU and Mexico with a 30% tariff unless an agreement is reached by August 1. The EU trade commissioner described the proposed tariff as “absolutely unacceptable.”
So far, markets remain calm due to ongoing delays in the actual implementation of these tariffs. However, that could change as the August deadline approaches. Trump may view it as politically damaging to issue repeated threats without following through.
Meanwhile, the EU is preparing countermeasures in case the deadline passes without an agreement and the U.S. enforces the 30% tariffs. The EU’s plan targets $84 billion worth of goods, including automobiles, aircraft, wine, bourbon, agricultural and chemical products, plastics, and electrical equipment. The outcome of U.S.-EU negotiations could be a major driver for gold in July.
Another factor to watch is the recent surge in bond yields in Japan. The rising probability that Japan’s ruling coalition may lose its majority is creating uncertainty, especially since opposition parties favor tax cuts and increased government spending. Higher Japanese yields could trigger a reversal in carry trade flows, which might also push up yields in Europe and the U.S.
Gold pushed higher, breaking out of the bearish trendline drawn from the July 13 top, and reached the 3370–3375 area. So far, this zone has provided strong short-term resistance. The 3374 is significant, as it marks both the 23.6% Fibonacci retracement level of the May–June rally and the 61.8% retracement of the June 16–30 pullback. This confluence could make it a key pivot point for gold this week.
If this level is broken, gold could gain further momentum and move above 3400. On the downside, 3342 has been acting as a support level for now.
