In the midst of global uncertainty and turmoil, gold’s position is irreplaceable
2025-07-08 14:31:12
Gold prices have proven remarkably resilient despite the many economic and geopolitical pressures facing the US market, underscoring its valuable reputation as a safe haven asset. With the 10-year Treasury yield at 4.3715%, investors are strongly seeking signs of stability in the face of growing concerns about trade hostilities, fiscal imbalances and a rising dollar. Next we examine the main drivers of gold prices as the US comes to a crossroads in fiscal policy and the dynamics of global markets.
The US and its trading nations are both in a trade standoff as President Trump's tariff threat hangs ominously after August 1. This has been pushed back from July 9 to August 1. In this atmosphere of uncertainty, investors have flocked to the US dollar, which remains such a safe-haven currency. Generally speaking, when the US dollar strengthens, it puts downward pressure on gold prices and creates challenges for foreign investors.
But so far, the story is anything but balanced. Despite the dollar reflecting strength, gold has remained stable above $3,300 an ounce, signaling its continued status as an important hedge against upcoming concerns about trade wars and possible stagflation. Ahead of the release of the Federal Open Market Committee (FOMC) minutes, market participants remain on edge and watch for signs of the Fed's attitude toward monetary tightening, which could influence the future direction of gold prices.
It brings another level of unpredictability to the future prospects of the market. The establishment of the "American Party" and open criticism of tariffs have caused surprise in investor circles. In sharp contrast to Trump's protectionist policies, Musk advocates market-oriented principles, which is a serious concern for the future prospects of the US economy.
In the world of gold, this ideological clash brings some unpredictability. While Trump’s policies have encouraged volatility caused by tariffs, Musk’s free trade push and his insistence on digital currencies such as Bitcoin go against traditional practice and could complicate gold’s role as a hedge. As investors weigh Musk’s influence amid the tariff turmoil, the gold market could experience greater volatility, especially if his political campaign begins to gain traction.
Gold's performance in the first half of 2025 demonstrated its dual function as a store of value and a safe haven in difficult times. Gold prices rose an impressive 25% amid growing concerns about the US fiscal deficit and the dangers posed by ongoing trade tensions. Against the backdrop of growing inflation and tariff risks, gold's appeal has become particularly evident, serving as a safe haven asset in the event of possible economic turmoil.
However, a stronger dollar continues to keep gold prices in check. Strong employment data (147,000 new non-farm payrolls in June) pushed the dollar higher. With the dollar supported, gold will face a tough time. But if the tariff war gains momentum, gold will get a boost again, especially as concerns about stagflation and trade wars grow.
It’s all about central banks and ETFs. Central banks remain optimistic about gold as they added 20 tonnes to their reserves in May 2025. This staggering figure confirms their long-term confidence in gold as insurance against future economic turmoil. In contrast, ETF redemptions fell by 19 tonnes over the same period. These redemptions reflect some investors’ short-term concerns, including concerns about the very short-term economy.
Musk's potential audit of the U.S. gold reserves could cause market turmoil, especially if concerns about the strength of the dollar and the validity of the U.S. gold reserves begin to really grow. Such a panic about national reserves could increase demand for gold as investors seek a safe haven for their money.
The geopolitical landscape greatly influences the fate of gold. Trump's threats of tariffs and the recent forecast of a 10% increase in imports from BRICS countries have greatly enhanced gold's safe-haven status. Speculations of retaliatory measures from other countries increase uncertainty in global markets and create an environment where gold can truly shine when markets are volatile.
In stark contrast, Musk's plan to create a zero-tariff zone between the United States and Europe could bring about an entirely new dynamic. While the deal would ease trade challenges with Europe, it could strengthen trade relations with the Asian giant and other major economies, creating increasingly complex geopolitical issues. As a result, these short-lived pressures could bolster gold's safe-haven status.
In 2025, the value of gold is determined by a combination of fiscal fluctuations, geopolitical conflicts, and the shifting tides of market dynamics. Trump’s tariff policies and Musk’s political grandstanding have created some volatility for investors. As the U.S. dollar continues to exert steady pressure on gold prices, gold’s role as a hedge against impending trade wars and potential stagflation is reinforced and helps maintain value. As market tides change at a dizzying pace, gold remains a cornerstone asset for investors looking to stabilize a volatile economy.
Where should investors focus their attention? 1. US fiscal policy: Be alert to the upcoming FOMC minutes, which will provide insights into possible shifts in US monetary policy, as well as insights into the future direction of the dollar's value and future price trends for gold; 2. Geopolitical news: We must be alert to any new comments on tariffs, especially given the growing tensions with the BRICS countries, this news could greatly increase the appeal of gold; 3. Central bank activities: Keep a close eye on central bank purchases, especially as they continue to buy gold, as any changes in this trend could herald a shift in global economic sentiment.
Spot gold daily chart source: Yihuitong
At 14:30 Beijing time on July 8, spot gold was quoted at US$3334.48 per ounce
Tariffs are a double-edged sword
The US and its trading nations are both in a trade standoff as President Trump's tariff threat hangs ominously after August 1. This has been pushed back from July 9 to August 1. In this atmosphere of uncertainty, investors have flocked to the US dollar, which remains such a safe-haven currency. Generally speaking, when the US dollar strengthens, it puts downward pressure on gold prices and creates challenges for foreign investors.
But so far, the story is anything but balanced. Despite the dollar reflecting strength, gold has remained stable above $3,300 an ounce, signaling its continued status as an important hedge against upcoming concerns about trade wars and possible stagflation. Ahead of the release of the Federal Open Market Committee (FOMC) minutes, market participants remain on edge and watch for signs of the Fed's attitude toward monetary tightening, which could influence the future direction of gold prices.
Musk's political dance sends mixed signals
It brings another level of unpredictability to the future prospects of the market. The establishment of the "American Party" and open criticism of tariffs have caused surprise in investor circles. In sharp contrast to Trump's protectionist policies, Musk advocates market-oriented principles, which is a serious concern for the future prospects of the US economy.
In the world of gold, this ideological clash brings some unpredictability. While Trump’s policies have encouraged volatility caused by tariffs, Musk’s free trade push and his insistence on digital currencies such as Bitcoin go against traditional practice and could complicate gold’s role as a hedge. As investors weigh Musk’s influence amid the tariff turmoil, the gold market could experience greater volatility, especially if his political campaign begins to gain traction.
Safe-haven demand vs. stronger dollar
Gold's performance in the first half of 2025 demonstrated its dual function as a store of value and a safe haven in difficult times. Gold prices rose an impressive 25% amid growing concerns about the US fiscal deficit and the dangers posed by ongoing trade tensions. Against the backdrop of growing inflation and tariff risks, gold's appeal has become particularly evident, serving as a safe haven asset in the event of possible economic turmoil.
However, a stronger dollar continues to keep gold prices in check. Strong employment data (147,000 new non-farm payrolls in June) pushed the dollar higher. With the dollar supported, gold will face a tough time. But if the tariff war gains momentum, gold will get a boost again, especially as concerns about stagflation and trade wars grow.
It’s all about central banks and ETFs. Central banks remain optimistic about gold as they added 20 tonnes to their reserves in May 2025. This staggering figure confirms their long-term confidence in gold as insurance against future economic turmoil. In contrast, ETF redemptions fell by 19 tonnes over the same period. These redemptions reflect some investors’ short-term concerns, including concerns about the very short-term economy.
Musk's potential audit of the U.S. gold reserves could cause market turmoil, especially if concerns about the strength of the dollar and the validity of the U.S. gold reserves begin to really grow. Such a panic about national reserves could increase demand for gold as investors seek a safe haven for their money.
Geopolitical contours
The geopolitical landscape greatly influences the fate of gold. Trump's threats of tariffs and the recent forecast of a 10% increase in imports from BRICS countries have greatly enhanced gold's safe-haven status. Speculations of retaliatory measures from other countries increase uncertainty in global markets and create an environment where gold can truly shine when markets are volatile.
In stark contrast, Musk's plan to create a zero-tariff zone between the United States and Europe could bring about an entirely new dynamic. While the deal would ease trade challenges with Europe, it could strengthen trade relations with the Asian giant and other major economies, creating increasingly complex geopolitical issues. As a result, these short-lived pressures could bolster gold's safe-haven status.
in conclusion
In 2025, the value of gold is determined by a combination of fiscal fluctuations, geopolitical conflicts, and the shifting tides of market dynamics. Trump’s tariff policies and Musk’s political grandstanding have created some volatility for investors. As the U.S. dollar continues to exert steady pressure on gold prices, gold’s role as a hedge against impending trade wars and potential stagflation is reinforced and helps maintain value. As market tides change at a dizzying pace, gold remains a cornerstone asset for investors looking to stabilize a volatile economy.
Where should investors focus their attention? 1. US fiscal policy: Be alert to the upcoming FOMC minutes, which will provide insights into possible shifts in US monetary policy, as well as insights into the future direction of the dollar's value and future price trends for gold; 2. Geopolitical news: We must be alert to any new comments on tariffs, especially given the growing tensions with the BRICS countries, this news could greatly increase the appeal of gold; 3. Central bank activities: Keep a close eye on central bank purchases, especially as they continue to buy gold, as any changes in this trend could herald a shift in global economic sentiment.
Spot gold daily chart source: Yihuitong
At 14:30 Beijing time on July 8, spot gold was quoted at US$3334.48 per ounce
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- 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.
