
As investors struggle with a complex combination of political and economic uncertainties that further enhance the yellow metal’s allure as a safe-haven asset, gold prices are rising once more. Spot prices rose above $3,330 per ounce on Tuesday, settling in a small range as investors weighed persistent concerns about the US Federal Reserve’s policy outlook against hopes of a breakthrough in the war in Ukraine.
The rally follows US President Donald Trump’s recent tariffs, which have caused a stir in international markets. Although tariff receipts in July alone reached a record high of $27 billion, economists point out that these policies function similarly to indirect taxes, increasing input costs for people and businesses, causing inflation, and lowering morale. Such circumstances have historically been favorable for gold, as investors gravitate toward non-yielding assets like bullion due to inflationary pressures and waning faith in the dollar.
With markets hoping for clarity on the direction of monetary policy, all eyes are on Fed Chair Jerome Powell’s upcoming speech at the Jackson Hole conference. At the moment, traders factor in an 84% chance of a 25 basis point rate drop in September, with a potential lowering by year’s end. When compared to bonds and the USD, gold is more appealing since lower interest rates lower the opportunity cost of owning it.
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