Gold Prices Fall as Trump Extends Tariffs and US Rate Cut Hopes Diminish
Gold prices witnessed a notable decline amid escalating global trade concerns and reduced expectations of an immediate US interest rate cut. The market reacted sharply after former US President Donald Trump extended tariffs on key Chinese goods, intensifying global economic uncertainty.
At the same time, hawkish signals from the US Federal Reserve have weighed heavily on gold, which typically benefits from a low-interest-rate environment.
🔻 Gold Market Snapshot
International Spot Gold: Trading near $2,310/oz, down over 0.6%
MCX Gold August Futures: Dropped to around ₹96,300 per 10 gm
Silver: Also saw selling pressure, with prices slipping below ₹1,22,000 per kg
🌐 Key Factors Behind Gold's Decline
1. Trump’s Tariff Extension
Trump’s decision to extend tariffs on a wider range of Chinese imports is seen as a step toward economic nationalism, triggering cautious investor sentiment and reducing safe-haven demand for gold in the near term.
2. Diminishing Rate Cut Expectations
Comments from US Federal Reserve officials indicate a less aggressive rate cut trajectory, making dollar-denominated assets more attractive and weakening gold's appeal.
3. Rising Bond Yields
US Treasury yields climbed, diverting investor funds from non-yielding assets like gold.
📈 Expert Insight
"The market is re-pricing the possibility of a Fed cut this year. As long as rates stay elevated, gold might remain under pressure,” said a senior commodities analyst.
However, many analysts still recommend a "buy-on-dips" strategy, given that geopolitical risks and long-term inflationary trends remain intact.
🛠️ Technical Outlook
Support: $2,290 / ₹95,800
Resistance: $2,360 / ₹97,000
Trend: Short-term bearish; long-term uptrend intact
✅ FAQs:
Q1. Why are gold prices falling despite global uncertainty?
Gold is declining due to reduced chances of a US rate cut, rising bond yields, and a temporary fall in safe-haven demand following Trump's tariff extension.
Q2. What impact do tariffs have on gold prices?
Tariffs can disrupt global trade and inflation, but if they strengthen the dollar or shift investor focus to other assets, gold may decline in the short term.
Q3. Is it still a good time to invest in gold?
Long-term investors may consider buying during dips. Gold’s long-term outlook remains positive due to ongoing geopolitical risks and central bank demand.
Q4. How are interest rates linked to gold?
Higher interest rates increase the opportunity cost of holding non-yielding assets like gold, often causing its price to fall.
Q5. What should traders watch next?
Watch out for US inflation data, Fed meeting minutes, and global political developments that could influence rate expectations and safe-haven demand.
Published : On 7th July
Published : Pankaj
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