Gold prices continue to rise for the second consecutive day, building on the rebound initiated in the previous session from their lowest levels in a month around the $3,247 $3,248 range. The metal received additional support during Tuesday’s trading from the decline in the US dollar, amid growing expectations that the Federal Reserve may resume its interest rate-cutting cycle in the near future. This drop in the dollar reflects a growing market conviction that monetary policy is shifting toward further easing, especially after recent data showed a slowdown in US consumer spending during May.
At the same time, escalating trade tensions are boosting gold’s appeal as a safe haven, particularly in light of the uncertainty surrounding President Donald Trump’s trade policies, with the July 9 deadline approaching for imposing new tariffs. Trump expressed frustration over stalled negotiations with Japan and threatened to raise tariffs on several countries if no agreement is reached. This was confirmed by the White House spokesperson, who stated that the president would meet with his trade team to determine tariff rates. Additionally, the US Treasury Secretary warned that some countries may be notified of significant tariff increases, ranging between 11% and 50%, which further fueled demand for gold during the Asian session.
This momentum in gold prices coincided with political moves in Washington, where Trump increased pressure on Federal Reserve Chair Jerome Powell, urging him in a written letter to lower borrowing costs a clear indication of his desire to accelerate the pace of monetary easing. These pressures, combined with weak economic data and the widening federal deficit, contributed to the US dollar’s fall to its lowest levels since February 2022, providing additional support for gold.
The Senate narrowly approved the start of discussions on a comprehensive economic bill backed by Trump, which is expected to add around $3.3 trillion to the deficit over the next decade. This has heightened investor concerns about the United States’ financial stability and has kept the dollar under consistent pressure.
Despite gold’s rise, gains may remain limited in the short term due to strong performance in global equities. US indices such as the S&P 500 and Nasdaq continue to reach new record highs, which has also influenced Asian markets. Nevertheless, investors are closely watching key upcoming US economic data starting with the Manufacturing PMI and the Job Openings and Labor Turnover Survey (JOLTS) later today, and culminating with Thursday’s Non Farm Payrolls report which will be crucial in shaping the outlook for monetary policy, the dollar, and consequently, gold performance in the coming period.
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