Gold Jumps Over 1% as Trade Tensions and Fiscal Fears Boost Safe-Haven Appeal

Gold prices soared by more than 1.13%, climbing to approximately $3,355 per ounce, before stablizing at $3,339 at the time of writing, propelled by mounting uncertainties surrounding global trade policies as the U.S. approaches a critical July 9 tariff deadline. The faltering progress in trade negotiations, combined with unpredictable economic policies under President Donald Trump’s administration, has solidified gold’s status as a safe-haven asset. With the U.S. Dollar Index dropping to a low of 96.38—its weakest since February 2022—before edging up to 96.85, investors are increasingly turning to gold to shield against escalating financial and geopolitical risks, heightened by political pressures on the Federal Reserve and looming inflationary concerns.

The threat of sweeping U.S. tariffs has rattled markets, raising fears of inflation and disruptions to global supply chains. Trump’s plan for “90 trade deals in 90 days” has seen limited success, with only a preliminary agreement with the UK and reduced tensions with China, while negotiations with other major trading partners remain stalled. The recent Senate approval of the “One Big Beautiful Bill,” a sweeping legislative package featuring permanent tax cuts and spending reforms projected to add over $3.3 trillion to the national debt, has further driven demand for gold as a hedge against fiscal instability. Additionally, a decline in U.S. two-year Treasury yields to 3.71%, a two-month low, has bolstered gold’s appeal as a non-yielding asset, particularly as markets price in a Federal Reserve interest rate cut by September.

Speaking at the European Central Bank Forum in Sintra, Portugal, Federal Reserve Chair Jerome Powell emphasized a cautious, data-driven approach to monetary policy, acknowledging potential inflationary pressures over the summer but underscoring the Fed’s commitment to patience. Powell noted that most Fed officials anticipate rate cuts later in 2025, reinforcing market expectations for a September policy easing. These comments, coupled with President Trump’s calls for aggressive rate reductions to “1% or better,” have amplified gold’s attractiveness as a safeguard against potential inflation. As trade and fiscal uncertainties persist, and with markets awaiting the upcoming Nonfarm Payrolls report, gold continues to shine as a preferred asset for investors navigating a volatile economic landscape.