Gold prices fell to their lowest level in several days on Monday, pressured by a modest rebound in the strength of the U.S. dollar. Nevertheless, expectations of potential interest rate cuts by the Federal Reserve and concerns over the U.S. fiscal outlook are likely to cap the dollar’s gains, while rising geopolitical tensions may provide additional support for the precious metal as a safe-haven asset.
Gold resumed its decline after hitting a weekly high of $3,366, as safe-haven demand shifted toward the U.S. dollar amid renewed market anxiety triggered by President Donald Trump’s latest warnings on tariffs. Market uncertainty is mounting ahead of the July 9 deadline set by Trump for reaching new trade agreements. Reports suggest that formal letters will be sent this Monday to 12 countries that have not yet finalized trade deals with the United States.
Last Thursday, Trump stated that the tariffs outlined in these letters would come into effect on August 1, with some potentially reaching as high as 70%. It is worth noting that in April, the U.S. president announced a baseline tariff of 10% on most countries, with possible increases up to 50% under a “reciprocal treatment” framework, scheduled to take effect this Wednesday.
Tensions intensified further after Trump threatened to impose an additional 10% tariff on countries affiliated with the BRICS alliance, pushing investors to seek refuge in the U.S. dollar.
Meanwhile, gold a non yielding asset continues to face downward pressure following a stronger than expected U.S. labor market report, which has dampened investor bets on swift interest rate cuts by the Fed. Data released Thursday showed that non farm payrolls rose by 147,000 in June, beating forecasts of a 110,000 increase, while May’s figures were revised up to 144,000. Additionally, the unemployment rate unexpectedly declined to 4.1% in June, compared to expectations of 4.3% and a prior reading of 4.2% in May.
Given these developments, gold prices are likely to remain highly sensitive to headlines surrounding tariffs and their impact on dollar movements. Traders are also awaiting the release of the Federal Reserve’s June meeting minutes on Wednesday for clearer signals regarding the timing of the next potential rate cut.
Stay informed about global markets through our previous analyses. and Now, you can also benefit from LDN company services via the LDN Global Markets trading platform.
