Gold prices rose in the European market on Tuesday in an attempt to recoup some of the losses from the previous session, as the market absorbed US President Donald Trump’s decision not to impose tariffs on imported gold bullion.
These gains were limited, however, by the continued rise of the US dollar in the foreign exchange market ahead of the release of key US inflation data, which is expected to provide fresh pricing for the likelihood of US interest rate cuts later this year.
Price Overview
• Gold prices today: Gold rose by about 0.5% to $3,358.23, from the opening level of $3,342.55, and recorded a low of $3,342.32.
• At Monday’s settlement, gold prices lost 1.6%, marking the first decline in three weeks, as correction and profit-taking accelerated from the two-week high of $3,409.10 per ounce.
• Beyond profit-taking, gold recorded its biggest daily loss since May 14, pressured by the rise in the dollar and the denial of tariffs on bullion.
Tariffs on Gold Bullion
President Donald Trump stated on Monday that no tariffs would be imposed on imported gold bullion, easing market tensions.
US gold futures for December delivery hit an all-time high late last week after the Financial Times reported that the United States had imposed tariffs on one-kilogram gold imports, citing a letter from US Customs and Border Protection.
US Dollar
The US Dollar Index rose on Tuesday by less than 0.1%, maintaining gains for the third consecutive day, reflecting continued strength in the US currency against a basket of global currencies.
President Trump extended the suspension of tariffs on goods and products imported from China for an additional 90 days, until early November, in a move aimed at easing trade tensions between Washington and Beijing.
As the US and China work toward a new trade agreement, a US official told Reuters that chipmakers Nvidia and AMD had agreed to allocate 15% of their China sales revenue to the US government to secure export licenses for semiconductors.
US Interest Rates
• According to CME Group’s FedWatch Tool: the probability of a 25-basis-point US interest rate cut at the September meeting is currently priced at around 85%, with a 15% probability of rates remaining unchanged.
• The probability of a 25-basis-point cut at the October meeting is currently at 94%, with a 6% probability of no change.
US Inflation Data
To reprice the above probabilities, traders are awaiting the release later today of key US inflation data for July, which is expected to have a significant impact on the Federal Reserve’s monetary policy path.
At 13:30 GMT, the headline Consumer Price Index is expected to rise by 2.8% year-on-year in July, up from a 2.7% increase in June, while the core CPI is expected to rise by 3.0% year-on-year, compared with a 2.9% increase the previous month.
Outlook for Gold
• Kelvin Wong, market analyst for Asia-Pacific at OANDA, said: “Market participants will now definitely focus on the upcoming rate cut from the Federal Reserve, which is almost fully priced in for September.”
• Wong added: “If we start to see core CPI data coming in slightly below expectations, it could further support expectations for a rate cut, which may reduce the cost of holding gold and support higher prices.”
SPDR Fund
Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by about 4.58 metric tons on Monday, marking the third consecutive daily increase, bringing the total to 964.22 metric tons — the highest since September 12, 2022.
