Gold Surges on Fed Rate Cut Hopes and US Tariff Tensions

Highlights:

• Gold prices surged 2.3% to US$3,359.20 an ounce (at the time of writing) as weak US jobs data fuelled expectations of Federal Reserve rate cuts as early as September.
• Swap markets now fully price in a Fed rate cut by October, while tumbling US Treasury yields and a weaker US dollar boosted gold's safe-haven appeal.
• Rising trade tensions also supported gold, with the White House planning steep reciprocal tariffs, lifting the average US tariff rate to an estimated 15.2%, the highest since 1930.

Gold prices soared as investors bet on imminent interest rate cuts by the US Federal Reserve following disappointing jobs data. At the time of writing, gold is trading at US$3,359.20 per ounce, up 2.3%.

Market Bets on Fed Rate Cuts

The rally in gold was sparked after recent US employment data indicated a significant slowdown in job growth over the past three months. This softer labour market print has heightened market expectations of a Federal Reserve rate cut as early as September. Swap markets are now fully pricing in a rate reduction by October, with growing anticipation that the central bank could act sooner if economic data continues to weaken. Falling US Treasury yields and a retreating US dollar further boosted gold’s appeal, as lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.

Safe-Haven Demand Amid Trade Tensions

Adding to the bullish sentiment was renewed safe-haven buying after the White House unveiled plans for steep reciprocal tariffs. The proposed measures include some of the harshest tariff rates since 1930, aiming to counter foreign trade policies perceived as unfair. Bloomberg projects the average US tariff rate will rise to 15.2%, a sharp jump from 2.3% in the previous year.

ANZ Group Holdings Limited (ASX: ANZ) noted that the weaker US jobs report has strengthened the market’s dovish outlook regarding the Federal Reserve’s next move, supporting gold prices further. The combination of dovish monetary policy expectations and escalating trade tensions has reinforced gold’s position as a preferred hedge against economic uncertainty, prompting a robust rally that erased losses from earlier in the week.

Disclaimer for Kapitales Research

The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.

Customer Notice:

Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.

Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com