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Gold prices held steady on Tuesday after three consecutive days of gains, buoyed by growing expectations that the Federal Reserve will implement a rate cut in September. This sentiment was further fueled by concerns over the U.S. economy and escalating trade tensions, which continue to provide support for safe-haven assets like gold.
As of 01:00 ET (05:00 GMT), Spot Gold was little changed at $3,372.25 an ounce, while December Gold Futures saw a muted movement, trading at $3,425.02/oz.
Fed Rate Cut Bets and Trade Tensions Fuel Gold’s Rally
Gold’s recent rally has been driven by expectations of a potential rate cut from the Federal Reserve, following a disappointing U.S. jobs report. On Friday, the release of the U.S. nonfarm payrolls data showed a sharp slowdown, with only 73,000 jobs added in July, far below the market expectation. Additionally, revisions to the May and June payrolls data showed a combined loss of 258,000 jobs, raising concerns over the health of the U.S. economy. The unemployment rate also ticked up to 4.2%, which added to fears of a cooling job market.
The weak jobs report increased the probability of a Fed rate cut in September, with the CME FedWatch tool indicating a 92% chance of a 25-basis-point cut. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making the precious metal more attractive to investors seeking a safe haven in uncertain times.
Additionally, despite recent losses, the US Dollar Index remained marginally higher after sharp declines in the past two trading days. A stronger dollar, however, makes gold less expensive for overseas buyers, limiting some upside potential for the metal.
Trade Tensions and Tariff Uncertainty Boost Gold’s Safe-Haven Appeal
Trade policy developments have also played a significant role in supporting gold. U.S. Trade Representative Jamieson Greer confirmed that President Trump’s sweeping tariffs on imports from nearly 70 countries are likely to remain in place, which continues to stoke inflation fears. Fresh threats from the U.S. to raise tariffs on India over its purchases of Russian oil further heightened market uncertainty and bolstered demand for safe-haven assets like gold.
Subdued Movement in Other Precious Metals
Other precious metals saw mixed movements in Tuesday’s session. Platinum futures fell 0.5%, trading at $1,335.65/oz, while silver futures edged up by 0.2%, reaching $37.415 per ounce.
In industrial metals, benchmark copper futures on the London Metal Exchange gained 0.3%, reaching $9,720.65 per ton. U.S. copper futures, however, remained largely unchanged at $4.454 per pound, as copper prices continued to grapple with the ongoing uncertainty surrounding President Trump’s planned 50% import tariffs on the metal.
The price of U.S. copper plunged by 20% last week after Trump excluded refined metal from the proposed tariff, leading to significant fluctuations in the copper market.
Outlook for Gold and Other Precious Metals
With market participants closely watching the Federal Reserve’s next move, along with the unfolding developments in trade policy, the demand for gold as a safe-haven asset is likely to remain strong. The ongoing geopolitical and economic uncertainty, coupled with expectations for looser monetary policy in the U.S., will likely continue to support gold prices in the near term.
As trade tensions persist, especially with the threat of further tariff increases and economic slowdowns, investors may increasingly turn to gold and other precious metals as a store of value and a hedge against rising inflation.
