Gold's (XAU/USD) Price Forecast: Will Gold Gain Acceptance Above the $3400/oz Handle?

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Gold prices are making a fresh play for the $3400/oz handle, but will a break prove to be sustainable or not? This question remains front and center as trade tensions rise once more.

The precious metal peaked just above the $3400 handle but failed to hold before a selloff saw the precious metals price drop to around the $3384/oz handle in the European session

Trade Tensions on the Rise

Gold prices have benefitted this week as trade tensions remain front and center especially between the US and EU. Trade tensions between the U.S. and the EU have grown as the EU plans new measures to counter tariffs threatened by President Trump.

According to a Wall Street Journal report, Trump has raised the proposed baseline tariff rate to 15-20%, up from the previously mentioned 10%. This change disrupted the EU’s plans, which were based on a 10% tariff rate.

In response, Germany, along with France and other European countries, has taken a tougher stance against the U.S. A German official reportedly said, “If they want war, they will get war.” If no trade deal is reached before the August deadline, tensions could worsen and disrupt global trade.

If these tensions do not come to a positive conclusion that could be the catalyst Gold prices need for acceptance above the $3400/oz mark.

US Dollar Struggles as DXY Breaks Trendline

Another factor working in favor of higher Gold prices comes courtesy of the US Dollar and the US Dollar Index (DXY).

As BoE President Bailey put it, Dollar shorts is the most crowded trade at present and that is showing.

Looking at the DXY on the H4 chart below, there is strong support being provided by the 100-day MA which rests at 97.67. A break of this support level could lead to further downside with support at 97.26 and 96.90 respectively.

If the DXY is to stage a recovery, a break above the 200-day MA will be needed. The RSI period 14 did bounce off the 50 neutral level which could be seen as a positive sign that could lead to a bounce for the US Dollar index.

US Dollar Index (DXY) Daily Chart, July 22, 2025

Source: TradingView (click to enlarge)

Outlook Moving Forward

Data remains sparse from the US this week with trade deals and earnings likely to drive sentiment.

Later in the week we have some US housing data which could impact the US Dollar as well as S&P PMI data which would shed further light on the US economy

However, I still see trade deals being the key to the US Dollar, market sentiment and Gold prices for the rest of the week.

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Technical Analysis - Gold (XAU/USD)

From a technical standpoint, Gold has broken above the 3400/oz mark.

A daily candle close above this level is needed and this would strengthen the probability of further upside.

Gold has been printing higher highs since bottoming out on June 30. The precous metal is also trading in a triangle pattern and is approaching the upper band of the pattern.

A break and daily candle close close above this level could lead to a move of around $386 which could push Gold close to the 3800/oz handle.

A rejection of the upper band of the triangle pattern could lead to a retest of immediate support of the 3400 handle before the 3375 and 3350 handles come into focus.

Gold (XAU/USD) Daily Chart, July 22, 2025

Source: TradingView (click to enlarge)

Client Sentiment Data - XAU/USD

Looking at OANDA client sentiment data and market participants are indecisive on Gold with 51% of traders net-long. I prefer to take a contrarian view toward crowd sentiment but the current data shows the indecision and uncertainty by market participants when it comes to the direction for gold prices moving forward.

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