The U.S.-Japan deal includes 15% reciprocal tariffs and expanded market access for U.S. exports, ranging from autos and agricultural goods to rice. “The announcement defused immediate trade tensions and improved the global risk tone,” analysts at ING wrote, adding that precious metals came under pressure as capital rotated into equities and riskier assets.

At the same time, the U.S. dollar staged a mild recovery, bouncing from a two-week low. Although the rebound in the greenback was modest, it was enough to trigger profit-taking in gold, which had surged over 4% in the past five trading days. Technical traders noted the move as a corrective pullback rather than a trend reversal, citing persistent uncertainty in the Fed’s rate path.

Fed Signals and Political Pressure Keep Floor Under Gold

While the Trump-Japan deal improved sentiment, uncertainty over Federal Reserve policy continues to cloud the macro outlook. President Trump has renewed calls for lower rates and publicly questioned Fed Chair Jerome Powell’s leadership. Meanwhile, Treasury Secretary Scott Bessent has requested a review of central bank operations, sparking concerns about institutional independence.

“Political interference in monetary policy is unsettling for markets,” said Michael Saunders, a senior FX strategist. “That ambiguity around future rate decisions is preventing a full dollar recovery, thereby cushioning the downside in gold.”

Lower interest rate expectations tend to support gold, which offers no yield but benefits from a weaker dollar environment.

Flash PMIs and Housing Data to Set the Tone

Later today, traders will scrutinize the U.S. Existing Home Sales report, followed by global flash PMI releases, which could influence economic sentiment and precious metals direction.