Gold Rises Due to Weak Dollar
Gold prices () rose by 0.35% on Wednesday, supported by a weaker (USD) and declining Treasury yields, which enhanced the metal’s appeal. The shift in investor sentiment followed a pullback in US yields amid growing concerns over economic softness and speculation around future monetary easing.
Gold’s rally also reflected investor caution surrounding geopolitical developments in the Middle East. Although the ceasefire between Iran and Israel remained intact, markets are wary of its fragility. Next week’s planned meetings between US and Iranian representatives—aimed at curbing Tehran’s nuclear ambitions—provided a short-term de-escalation signal, helping stabilise risk sentiment. However, lingering doubts about the ceasefire’s durability and broader regional stability continued to support safe-haven demand for gold.
On the monetary front, Federal Reserve (Fed) Chair Jerome Powell maintained a measured tone during the second day of congressional testimony. He acknowledged that while the Fed can handle inflation linked to new tariffs, it isn’t yet ready to . His remarks, combined with soft US data for June, hinting at labour market vulnerabilities and uncertainty around trade policy, challenged the Fed’s resistance to easing.
XAU/USD rose during the Asian and early European trading sessions. Investors are now awaiting key macroeconomic data due at 12:30 p.m. UTC, including growth and figures. The data could further influence the policy outlook and gold’s trajectory. Key levels to watch are support at $3,295 and resistance at $3,340.
Euro Hits Three-Year High
The euro () rose to approximately 1.66000 on Wednesday, marking its highest level in over three years. A combination of easing geopolitical tensions, dovish signals from the Federal Reserve (Fed), and mounting fiscal concerns weighed on the US dollar (USD) and bolstered the euro.
The euro’s rise reflects growing investor confidence in the de-escalation of the Middle East tensions. US and Iranian officials are scheduled to meet next week to discuss Tehran’s nuclear programme. The apparent stability of the Israel–Iran ceasefire has further reduced demand for the US dollar as a safe-haven asset.
Meanwhile, Fed Chair Jerome Powell maintained a cautious stance, reaffirming that interest rates are likely to remain steady in the near term. He warned that US President Donald Trump’s trade tariffs could fuel inflation, making it premature to commit to immediate policy easing. However, Powell acknowledged that without tariff-related inflation risks, the Fed would likely have continued cutting rates—highlighting the central bank’s underlying dovish bias. Markets have responded by increasing expectations for policy easing, with traders now pricing in over 60 basis points of rate cuts by year-end and the next reduction anticipated in September.
EUR/USD continued rising during the Asian and early European trading sessions. Attention is now shifting back to the US fiscal landscape as Congress works towards finalising a major tax and spending package. Trade policy also remains in focus ahead of President Trump’s 9 July deadline for progress on key negotiations, adding another layer of uncertainty to the US dollar’s outlook. Key levels to watch for EUR/USD traders are resistance at 1.16300 and support at 1.14500.
AUD Rises for Fourth Consecutive Session
The Australian dollar () climbed towards 0.65100 on Wednesday, marking its fourth consecutive daily gain. AUD/USD reached a one-week high, supported by improving global risk sentiment.
The fragile US-brokered ceasefire between Israel and Iran continued to support market stability. Traders remain cautiously optimistic ahead of US–Iran talks scheduled next week. Despite US President Donald Trump’s scepticism towards diplomatic engagement, the truce has held so far, offering a temporary reprieve from geopolitical volatility.
Global monetary policy developments also influenced market sentiment. Federal Reserve (Fed) Chair Jerome Powell reiterated on Wednesday that the central bank isn’t rushing to cut rates, even as markets increasingly price in multiple reductions by year-end. Powell’s measured tone helped temper aggressive easing expectations, supporting risk-sensitive assets such as the Australian dollar by easing concerns over US economic instability while maintaining policy flexibility.
AUD/USD rose during Asian and early European trading sessions. Softer inflation data and weaker-than-expected Q1 Gross Domestic Product () figures reinforced expectations that the Reserve Bank of Australia will implement a 25-basis-point in July. Investors are now pricing in a total of 73 basis points of rate cuts by end-2025, highlighting the combined influence of global and domestic factors on the Australian dollar’s trajectory.