Tuesday, July 1, 2025
Gold prices continued their upward momentum on Tuesday, climbing to a multi-day high around $3,340–$3,350, fueled by sustained weakness in the US Dollar and renewed geopolitical and economic uncertainty.
After rebounding from a one-month low in the $3,247–$3,248 zone, the precious metal has gained for the second consecutive session, as investor demand for safe-haven assets grows amid deepening fiscal concerns and ambiguous US trade policies.
🧭 Fundamental Drivers: Weaker USD, Trade Friction, and Fed Policy
The US Dollar slumped to its lowest level since February 2022, weighed down by mounting anxieties over America’s deteriorating fiscal position. The Senate recently advanced President Donald Trump’s “One Big Beautiful Bill,” which could swell the federal deficit by $3.3 trillion over the next decade — a move sparking investor unease and pressure on the greenback.
Gold also benefits from heightened geopolitical tension, particularly surrounding President Trump’s escalating tariff rhetoric. With a July 9 deadline looming, Trump has signaled potential hikes in tariff rates — from 10% up to as high as 50% — targeting nations reluctant to renegotiate trade deals. These comments, echoed by Treasury Secretary Scott Bessent, injected uncertainty into markets, further boosting safe-haven flows into gold during the Asian and European trading hours.
📉 Monetary Policy and Market Sentiment
Meanwhile, pressure is mounting on the Federal Reserve to respond to signs of economic cooling. A handwritten note from Trump to Fed Chair Jerome Powell urged lower interest rates, citing recent data showing a surprise dip in consumer spending in May, per the PCE report.
While markets see only a modest chance of a July rate cut, there’s now a 74% probability of easing by September, further fueling downward pressure on the USD and lifting gold demand.
⚠️ What’s Next: All Eyes on NFP
Traders are now turning attention to a series of key US economic indicators due later this week, starting with Tuesday’s ISM Manufacturing PMI and JOLTS job openings data. However, the spotlight remains on Thursday’s Nonfarm Payrolls (NFP) report, a pivotal release that could significantly influence the Fed’s next policy steps and, by extension, the trajectory of both the USD and gold prices.