Gold rose to its highest level in more than a month as traders assessed the impact of tariffs on inflation and interest rates in the absence of relevant economic data.
The dollar and bond yields weakened on Monday, pushing bullion prices up as much as 1.5%. Bullion typically benefits when the US dollar weakens and in a lower interest rate environment. Macro funds have begun buying back their previously established short positions in gold, according to TD Securities. Bullion is set to see further gains, driven by catalysts including trade wars, continued interest rate cuts, a stagflationary environment, and challenges to central bank credibility, commodity strategist Daniel Ghali said in a note.
Fed Governor Christopher Waller advocated for a rate cut last week, and Governor Michelle Bowman also expressed openness to a cut. Meanwhile, their counterparts remain more cautious due to persistent inflation risks fueled by tariffs. The disagreement comes as Trump continues to pressure Fed Chairman Jerome Powell, whose term ends in May 2026, with the White House evaluating candidates to replace him and promising to choose someone who will cut interest rates. The president also denied a Wall Street Journal report that Treasury Secretary Scott Bessent advised him that markets would react badly if he fired Powell.
On the trade front, European Union officials will meet as early as this week to formulate plans to respond to a possible no-deal scenario with the US. Investors will be watching the progress of talks with several trading partners ahead of Trump's August 1 deadline to impose so-called reciprocal tariffs.
Gold has gained more than a quarter this year, with geopolitical tensions and concerns about dollar-denominated assets fueling a flight to safe-haven assets. The precious metal has traded in a tight range for the past few months, as investors await clarity on global trade talks, the direction of interest rate cuts, and the impact of tariffs on the global economy.
Spot gold rose 1.5% to $3,398.39 an ounce at 11:53 a.m. in New York. The Bloomberg Dollar Spot Index weakened slightly. Silver, platinum, and palladium all strengthened. (alg
Source: Bloomberg
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