The Federal Reserve’s recent FOMC minutes reveal deep divisions among policymakers regarding the timing and scale of rate cuts this year. Some officials advocate for immediate easing, while others see no cuts until 2025, reflecting uncertainty over inflation, labor market resilience, and global risks.
This policy split has left investors guessing, amplifying volatility in gold markets as traders react to every Fed signal.
Markets are now pricing in a lower probability of a July rate cut after a robust US jobs report, which has tempered expectations for imminent easing. With no consensus at the Fed, gold’s trajectory will remain highly sensitive to evolving economic data and shifting policy rhetoric.
The prospect of a prolonged rate pause or only gradual cuts has kept the US dollar strong, exerting downward pressure on gold prices in the short term.
Trade Tensions and Tariff Deadlines Add to Volatility
President Trump’s aggressive tariff agenda is injecting fresh uncertainty into global markets. The looming August 1 deadline for new tariffs, including a 50% levy on copper, potential 200% duties on pharmaceuticals, and a 10% tax on BRICS imports, has rattled investors and fueled safe-haven demand for gold.
While the initial delay of tariff implementation provided some market relief, the threat of renewed trade friction persists. Any escalation or retaliatory measures from affected countries could trigger further volatility and a flight to gold as a hedge against global economic instability.
The interplay between trade policy and Fed decision-making is critical. Tariff-driven inflation could constrain the Fed’s ability to cut rates, limiting gold’s upside even as geopolitical risks rise.
Did you know?
Gold prices have surged over 39% in the past year, peaking at a record $3,500 per ounce in April 2025. This rally was driven not only by monetary policy and inflation fears, but also by unprecedented global central bank gold purchases and the sharp escalation of US trade barriers.
Dollar Strength and Treasury Yields Cap Gold’s Upside
The US dollar index has rebounded, up 0.2% to a two-week high, as investors seek safety amid trade uncertainty and mixed economic signals. Rising Treasury yields have also weighed on gold, making non-yielding assets less attractive.
Analysts note that gold’s recent dip below $3,290 per ounce reflects these headwinds, with technical support seen at $3,320 and resistance at $3,355. If the dollar remains firm and yields stay elevated, gold may struggle to break higher in the near term.
However, any signs of dollar weakness or a dovish Fed pivot could quickly revive bullish momentum for gold.
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Structural Bull Case for Gold Remains Intact
Despite short-term pressures, the long-term outlook for gold remains robust. Persistent concerns over US fiscal deficits, global recession risks, and central bank gold buying continue to underpin demand.
J.P. Morgan Research forecasts gold to average $3,675 per ounce by the end of 2025, with prices potentially reaching $4,000 by mid-2026 as structural drivers, geopolitical instability, trade wars, and fiscal imbalances support a sustained bull market. Gold’s 39% year-on-year gain underscores its enduring appeal as a store of value and inflation hedge.
Summer Outlook Hinges on Fed, Tariffs, and Data
The coming weeks will be pivotal for gold. Investors are closely watching the July 15 inflation report, the Fed’s late-July meeting, and the August 1 tariff deadline for fresh cues. Any surprises from these events could trigger sharp price swings.
If inflation remains contained and the Fed stays cautious, gold may hold steady with minor fluctuations. However, renewed trade tensions or a dovish policy shift could quickly reignite safe-haven demand and propel prices higher.
Technical levels to watch include support at $3,320 and resistance at $3,355, with a sustained break above $3,375 signaling a return to bullish momentum.
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