Gold Nears Monthly High Amid Tariff Tensions and Fed Rate Speculation

Highlights:

• Gold traded near US$3,395 an ounce at the time of writing, its highest in a month amid renewed trade tensions.
• Weaker US dollar and speculation about future Fed rate cuts boosted demand for safe-haven assets.
• Gold is up over 25% this year, supported by global conflict and tariff uncertainties.

Gold Trades Steady as Trade Uncertainty Looms

At the time of writing, gold was holding firm near US$3,395 an ounce, maintaining its highest level in a month. The precious metal’s steady performance reflects growing investor caution as global markets brace for potential new tariffs from the United States. Concerns about U.S. President Donald Trump’s possible tariff announcements before the August 1 deadline have driven a shift toward safe-haven assets like gold.

US Dollar Weakness Supports Gold Prices

Adding to gold’s appeal, the US dollar recorded its worst performance in nearly a month, making bullion more attractive to buyers using other currencies. On Monday (Tuesday AEST), White House press secretary Karoline Leavitt indicated that Trump may issue additional unilateral tariff letters ahead of the deadline, fueling fears of trade disruption.

Investors Watch Federal Reserve's Next Move

Market participants are also closely watching the U.S. Federal Reserve’s policy direction. While Fed governor Christopher Waller has voiced support for a rate cut, most other officials appear hesitant, resulting in a divided outlook. Although swap markets suggest almost no chance of a rate cut next week, traders are pricing in a total reduction of 46 basis points by year-end. Lower interest rates typically enhance gold’s appeal, as the metal yields no interest.

Gold Remains a Key Safe Haven in Volatile Times

So far in 2025, gold has climbed over 25% amid global geopolitical risks, including conflicts in Ukraine and the Middle East, and the uncertainty around Trump's trade agenda. Despite this upward trend, the metal has largely moved within a tight range in recent months, reflecting ongoing caution among investors. Gold remains a preferred asset as markets brace for policy and political shifts.

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