Gold Surges to $3,392 as Tariffs and Jobless Data Fuel Stagflation Fears

Gold prices rallied sharply on August 7, 2025, climbing 0.68% to $3,392.31 per troy ounce, driven by renewed safe-haven demand amid escalating U.S. tariffs and a weakening labor market. The XAU/USD pair, which tracks gold against the U.S. dollar, saw a daily range between $3,365.31 and $3,397.58, reflecting heightened market volatility. Investors turned to gold as a hedge against stagflation risks, spurred by disappointing U.S. jobs data and new trade barriers impacting global markets. The precious metal’s year-to-date gain of 29.21% underscores its resilience in a turbulent economic environment.

The U.S. Department of Labor reported Initial Jobless Claims for the week ending August 2 at 228,000, above the forecasted 221,000 and the prior week’s 218,000. Continuing Claims surged to 1.97 million, the highest since November 2021, signaling persistent labor market softness. This data, combined with elevated inflation pressures, has heightened stagflation concerns, where economic growth slows while prices remain high. Investors responded by boosting gold demand, as the non-yielding asset typically thrives in low interest rate environments and during economic uncertainty. Market sentiment now reflects a 95% probability of a 25-basis-point Federal Reserve rate cut in September, further supporting gold’s appeal.

New U.S. tariffs, effective Thursday, targeting countries like Switzerland, Brazil, and India, have intensified global trade tensions, providing a strong tailwind for gold. These import taxes, part of a broader protectionist policy, have raised fears of supply chain disruptions and inflationary pressures, particularly as the U.S. Dollar Index edged up 0.10% to 98.29. Despite stable U.S. 10-year Treasury yields at 4.24%, gold’s upward momentum persisted, driven by its role as a safe-haven asset. The tariffs, coupled with uncertainty over potential Fed leadership changes, have kept markets on edge, with gold benefiting from the resulting risk aversion.

Technically, gold remains bullish, consolidating within a $3,350-$3,397 range after a 2% surge on August 1. The Relative Strength Index indicates sustained bullish momentum, though it has not yet reached recent peaks, suggesting potential for further gains. Resistance at $3,400 remains a key hurdle, with a breakout potentially targeting $3,500 or higher. Support lies at $3,330, with a break below risking a pullback to $3,280. As markets await Friday’s University of Michigan Consumer Sentiment and inflation expectations data, alongside Fed officials’ remarks, gold’s trajectory will depend on evolving trade policies and macroeconomic signals.