U.S. Trade Policy Bolsters Gold Prices' Decline
Gold and Silver Prices Fluctuate Amid Economic Data and Trade Talks
Gold prices for August delivery decreased by $28.20 per troy ounce, or 0.85%, while silver prices dropped by 53.50 cents per troy ounce, or 1.40%. These changes were influenced by various factors, including trade talks, economic data, and geopolitical risks.
In the economic front, positive US employment figures, such as the ADP report showing 104,000 jobs added in July, supported the perception of economic resilience. This, in turn, put some pressure on gold prices. However, the US Federal Reserve's decision and subsequent news conference by Chair Jerome Powell, which occurred today, could provide further insight into the future of interest rates and gold prices.
The trajectory of gold prices may become more clear by next week. The current outlook for gold remains bullish in the medium to long term, with forecasts expecting gold to average around $3,675 per ounce by late 2025 and potentially reach $4,000 per ounce by mid-2026. This bullish trend is driven by ongoing geopolitical risks, policy uncertainty, and structural demand shifts including central bank and investor interest.
Trade talks have been a significant factor in gold prices, with some easing of fears around a global trade war. Agreements between the US and EU and ongoing US-China discussions have reduced immediate trade-related risk, but these talks are still uncertain and closely watched. For example, despite the trade talks, tariff threats against countries like India continue, and US officials seek to extend trade truces with China, keeping volatility alive.
The ongoing US-China trade negotiations and US tariffs remain key factors to monitor, as they could tilt the market either way. China and the US have agreed to seek an extension from President Trump on their mutual trade truce time period, which expires on August 12.
Meanwhile, the Middle East situation remains tense but military-wise peaceful. The threat by Iran-backed Yemen's Houthi militia has caused cargo ships to circumvent the Red Sea, increasing transportation and insurance costs. Year-on-year, pending home sales decreased by 2.80%, and month-on-month pending home sales fell by 0.8% from May.
Despite these fluctuations, economists expect the Fed to resist growing pressure from businesses and keep lending rates steady at the current benchmark of 4.25% to 4.5%. Canada, South Korea, and various other countries are currently in discussions with their US counterparts to secure deals. PCE prices advanced by 2.1% for Q2 2025, and the Core Personal Consumption Expenditures price index increased by 2.5% for the same period.
In conclusion, gold prices are expected to continue their structural bull trend over 2025-2026 due to geopolitical and macroeconomic uncertainties, but short-term price fluctuations are influenced by the progress in trade talks and economic data releases. It is essential to monitor these factors closely as they could significantly impact gold’s safe-haven demand.
The changing gold prices appear to be connected with the progress in trade talks, as ongoing discussions between the US and its trade partners and tariff threats against certain countries can influence the market.
Businesses and investors closely watch economic data releases, such as employment figures and inflation rates, as these can impact future interest rates and financial market trends, including the price of gold.
