Gold trading reminder: Tariff storm and geopolitical crisis provide safe-haven support, pay attention to the non-farm payroll report
2025-08-01 07:49:16
Spot gold prices climbed 0.46% on Thursday (July 31), reaching an intraday high of $3,314.71 per ounce before closing at $3,289.92. This surge was driven by a combination of factors: heightened global trade uncertainty, rising inflationary pressures in the United States, and geopolitical tensions. With the August 1 deadline for US tariff negotiations approaching, concerns about future economic trends have driven investors to flock to the gold market in search of safety.
On the evening of July 31st (local time) (August 1st, morning Beijing time), the White House announced that President Trump had signed an executive order adjusting reciprocal tariff rates for most countries. Gold prices saw little fluctuation in early Asian trading on Friday (August 1st), currently trading around $3,390 per ounce. Investors should monitor the impact of the tariff policy, as well as the July non-farm payroll report and speeches by Federal Reserve officials.
Trump's tariff policy stirs up controversy again
US President Trump's recent frequent use of tariffs has drawn significant attention from global markets. On the evening of July 31st, local time, Trump announced a tariff increase on Canada from 25% to 35%, effective August 1st. He also imposed tariffs on some imports from Brazil and South Korea. This series of measures has not only exacerbated tensions with major trading partners but also pushed up prices for imported goods, further fueling inflationary pressures. Meanwhile, Trump granted Mexico a 90-day tariff exemption to continue negotiating a broader trade agreement, but he explicitly stated that higher tariffs would apply to other countries with which no agreement had been reached after August 1st.
Risk aversion is rising
Uncertainty surrounding tariffs has created market tension. Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, noted that with the August 1st tariff deadline approaching, trade uncertainty has significantly increased, prompting some investors to seek protection in safe-haven assets like gold. Trump's tariff policy has not only impacted commodity prices but also increased instability in global supply chains, increased business costs, and impacted consumer confidence. Against this backdrop, gold's appeal as a traditional safe-haven asset has significantly increased, attracting significant capital inflows and driving up prices.
June inflation data exceeded expectations
The latest data from the U.S. Department of Commerce shows that the Personal Consumption Expenditures (PCE) price index rose 0.3% month-over-month in June, up from a revised 0.2% in May. Core PCE inflation rose 2.8% year-over-year. Commodity prices rose particularly sharply, with furniture and durable home appliances posting their largest increases since March 2022. Recreational goods and vehicle prices also saw significant increases. These figures reflect the direct impact of Trump's tariff policy, which has increased the cost of imported goods. Olu Sonola, head of U.S. economic research at Fitch Ratings, stated that current inflation trends are running counter to the Federal Reserve's 2% target, which could further complicate market expectations for a September or October rate cut.
The Federal Reserve maintains high interest rates
At its July 31st meeting, the Federal Reserve decided to maintain its target interest rate range at 4.25%-4.50%. Chairman Powell, after the meeting, explicitly stated that inflationary pressures remain excessive, making a September rate cut unlikely. This hawkish stance directly dampened market expectations for near-term monetary easing. Powell emphasized that the risks of price increases stemming from trade policy and other factors remain, and that the Fed will maintain a "moderately restrictive" monetary policy to control inflation. The cooling of market expectations for rate cuts led to the US dollar index's first monthly gain since 2025, further suppressing gold prices. However, surging safe-haven demand dominated in the short term, driving gold prices higher against the trend.
Israel escalates tensions in the Middle East
Rising geopolitical risks provided additional support for gold prices. On July 31, Israeli Defense Minister Katz announced an airstrike against Hezbollah targets in Lebanon, striking its largest precision missile production base. Meanwhile, Israeli media reported that ceasefire talks in Gaza were on the verge of collapse, and that Israel was considering expanding its military operations in Gaza to achieve demilitarization. These developments heightened tensions in the Middle East, and market concerns about potential escalation of conflict further fueled demand for safe-haven assets. As the preferred asset against geopolitical uncertainty, gold naturally became a safe haven for investors.
Global risk superposition effect
The deteriorating situation in the Middle East is not an isolated incident; it is compounded by factors such as the global trade war and domestic economic pressures in the United States. Faced with multiple uncertainties, investors tend to allocate funds to low-risk assets such as gold. This concentrated outbreak of risk aversion has given gold prices strong upward momentum in the short term. While the strengthening dollar and fluctuating US Treasury yields have put some resistance to gold prices, the continued development of geopolitical risks has provided solid support for gold.
Labor market signals
Investors are closely watching the US non-farm payroll data for July, due to be released on August 1st, for further clues on the Federal Reserve's interest rate path. Economists surveyed expect 110,000 new jobs in July, down from 147,000 in June, and a slight rise in the unemployment rate from 4.1% to 4.2%. Furthermore, a recent slight increase in initial unemployment claims and a high level of continuing claims suggest that while the labor market remains stable, reemployment for laid-off workers has become more difficult. These data are likely to further confirm the economic slowdown and support the Federal Reserve's cautious stance.
Impact on Gold Prices <br/>The performance of the non-farm payroll data will directly influence market expectations of the Federal Reserve's future policies. A weak reading could reignite expectations of a rate cut, weaken the dollar, and boost gold prices. Conversely, a strong reading could further reinforce the Fed's hawkish stance, putting pressure on gold prices. However, regardless of the data's outcome, tariffs and geopolitical uncertainty are expected to continue to support gold's safe-haven demand, and gold prices are expected to remain volatile at high levels in the near term.
Short-term drivers
In the short term, the progress of tariff negotiations, the evolving situation in the Middle East, and US economic data will be key factors influencing gold prices. After August 1st, the Trump administration's announcement of final tariff rates for other countries could trigger further market volatility, while the progress of US-China trade agreement negotiations will also attract close attention. Furthermore, persistent geopolitical risks provide solid support for gold. Technically, if gold can hold above the key $3,300/oz level, it could see further gains in the short term. However, if pressure persists at $3,300, caution is warranted regarding the possibility of a break below the 100-day moving average support level near $3,270. Furthermore, caution is warranted regarding the risk of a pullback from a strengthening US dollar and a rebound in US Treasury yields.
Long-Term Trend Analysis <br/>From a medium- to long-term perspective, global economic uncertainty and persistent inflationary pressures provide a favorable environment for gold. Trump's protectionist trade policies could reshape global supply chains, pushing up commodity prices and exacerbating inflation expectations. The Federal Reserve's cautious approach amidst high inflationary pressures is likely to keep real interest rates low, which is positive for gold, a non-interest-bearing asset. Furthermore, the prolonged trend of geopolitical risks and the continued increase in gold holdings by global central banks will provide structural support for gold prices. Gold is expected to remain a key component of investors' asset allocation for some time to come.
(Spot gold daily chart, source: Yihuitong)
At 07:47 Beijing time, spot gold was trading at $3290.88 per ounce.
On the evening of July 31st (local time) (August 1st, morning Beijing time), the White House announced that President Trump had signed an executive order adjusting reciprocal tariff rates for most countries. Gold prices saw little fluctuation in early Asian trading on Friday (August 1st), currently trading around $3,390 per ounce. Investors should monitor the impact of the tariff policy, as well as the July non-farm payroll report and speeches by Federal Reserve officials.
Tariff uncertainty: Trade war clouds hang over the world
Trump's tariff policy stirs up controversy again
US President Trump's recent frequent use of tariffs has drawn significant attention from global markets. On the evening of July 31st, local time, Trump announced a tariff increase on Canada from 25% to 35%, effective August 1st. He also imposed tariffs on some imports from Brazil and South Korea. This series of measures has not only exacerbated tensions with major trading partners but also pushed up prices for imported goods, further fueling inflationary pressures. Meanwhile, Trump granted Mexico a 90-day tariff exemption to continue negotiating a broader trade agreement, but he explicitly stated that higher tariffs would apply to other countries with which no agreement had been reached after August 1st.
Risk aversion is rising
Uncertainty surrounding tariffs has created market tension. Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, noted that with the August 1st tariff deadline approaching, trade uncertainty has significantly increased, prompting some investors to seek protection in safe-haven assets like gold. Trump's tariff policy has not only impacted commodity prices but also increased instability in global supply chains, increased business costs, and impacted consumer confidence. Against this backdrop, gold's appeal as a traditional safe-haven asset has significantly increased, attracting significant capital inflows and driving up prices.
Inflationary pressure: The Fed's hawkish stance exacerbates market anxiety
June inflation data exceeded expectations
The latest data from the U.S. Department of Commerce shows that the Personal Consumption Expenditures (PCE) price index rose 0.3% month-over-month in June, up from a revised 0.2% in May. Core PCE inflation rose 2.8% year-over-year. Commodity prices rose particularly sharply, with furniture and durable home appliances posting their largest increases since March 2022. Recreational goods and vehicle prices also saw significant increases. These figures reflect the direct impact of Trump's tariff policy, which has increased the cost of imported goods. Olu Sonola, head of U.S. economic research at Fitch Ratings, stated that current inflation trends are running counter to the Federal Reserve's 2% target, which could further complicate market expectations for a September or October rate cut.
The Federal Reserve maintains high interest rates
At its July 31st meeting, the Federal Reserve decided to maintain its target interest rate range at 4.25%-4.50%. Chairman Powell, after the meeting, explicitly stated that inflationary pressures remain excessive, making a September rate cut unlikely. This hawkish stance directly dampened market expectations for near-term monetary easing. Powell emphasized that the risks of price increases stemming from trade policy and other factors remain, and that the Fed will maintain a "moderately restrictive" monetary policy to control inflation. The cooling of market expectations for rate cuts led to the US dollar index's first monthly gain since 2025, further suppressing gold prices. However, surging safe-haven demand dominated in the short term, driving gold prices higher against the trend.
Geopolitics: Middle East tensions fuel gold prices
Israel escalates tensions in the Middle East
Rising geopolitical risks provided additional support for gold prices. On July 31, Israeli Defense Minister Katz announced an airstrike against Hezbollah targets in Lebanon, striking its largest precision missile production base. Meanwhile, Israeli media reported that ceasefire talks in Gaza were on the verge of collapse, and that Israel was considering expanding its military operations in Gaza to achieve demilitarization. These developments heightened tensions in the Middle East, and market concerns about potential escalation of conflict further fueled demand for safe-haven assets. As the preferred asset against geopolitical uncertainty, gold naturally became a safe haven for investors.
Global risk superposition effect
The deteriorating situation in the Middle East is not an isolated incident; it is compounded by factors such as the global trade war and domestic economic pressures in the United States. Faced with multiple uncertainties, investors tend to allocate funds to low-risk assets such as gold. This concentrated outbreak of risk aversion has given gold prices strong upward momentum in the short term. While the strengthening dollar and fluctuating US Treasury yields have put some resistance to gold prices, the continued development of geopolitical risks has provided solid support for gold.
Economic data preview: Non-farm payroll report attracts much attention
Labor market signals
Investors are closely watching the US non-farm payroll data for July, due to be released on August 1st, for further clues on the Federal Reserve's interest rate path. Economists surveyed expect 110,000 new jobs in July, down from 147,000 in June, and a slight rise in the unemployment rate from 4.1% to 4.2%. Furthermore, a recent slight increase in initial unemployment claims and a high level of continuing claims suggest that while the labor market remains stable, reemployment for laid-off workers has become more difficult. These data are likely to further confirm the economic slowdown and support the Federal Reserve's cautious stance.
Impact on Gold Prices <br/>The performance of the non-farm payroll data will directly influence market expectations of the Federal Reserve's future policies. A weak reading could reignite expectations of a rate cut, weaken the dollar, and boost gold prices. Conversely, a strong reading could further reinforce the Fed's hawkish stance, putting pressure on gold prices. However, regardless of the data's outcome, tariffs and geopolitical uncertainty are expected to continue to support gold's safe-haven demand, and gold prices are expected to remain volatile at high levels in the near term.
Future Outlook: Can Gold Continue Its Glory?
Short-term drivers
In the short term, the progress of tariff negotiations, the evolving situation in the Middle East, and US economic data will be key factors influencing gold prices. After August 1st, the Trump administration's announcement of final tariff rates for other countries could trigger further market volatility, while the progress of US-China trade agreement negotiations will also attract close attention. Furthermore, persistent geopolitical risks provide solid support for gold. Technically, if gold can hold above the key $3,300/oz level, it could see further gains in the short term. However, if pressure persists at $3,300, caution is warranted regarding the possibility of a break below the 100-day moving average support level near $3,270. Furthermore, caution is warranted regarding the risk of a pullback from a strengthening US dollar and a rebound in US Treasury yields.
Long-Term Trend Analysis <br/>From a medium- to long-term perspective, global economic uncertainty and persistent inflationary pressures provide a favorable environment for gold. Trump's protectionist trade policies could reshape global supply chains, pushing up commodity prices and exacerbating inflation expectations. The Federal Reserve's cautious approach amidst high inflationary pressures is likely to keep real interest rates low, which is positive for gold, a non-interest-bearing asset. Furthermore, the prolonged trend of geopolitical risks and the continued increase in gold holdings by global central banks will provide structural support for gold prices. Gold is expected to remain a key component of investors' asset allocation for some time to come.
(Spot gold daily chart, source: Yihuitong)
At 07:47 Beijing time, spot gold was trading at $3290.88 per ounce.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
