Gold prices have risen to about $3,306, up 0.95%, thanks to increased demand for safe investments amid new trade tensions. This comes just before the August 1 tariff deadline, with the US considering new tariffs on several countries. The US Dollar has slightly fallen from recent highs, which is helping gold prices recover. President Trump announced new tariffs: a 25% tariff on Indian imports for national security reasons and a 50% tariff on certain Brazilian goods. A deal with South Korea resulted in a lowered 15% tariff on imports in exchange for $350 billion in American investments. The US is also negotiating trade agreements with the EU and Japan, while talks continue with other nations.

Focus On Economic Data

Traders are keeping an eye on upcoming US economic data, particularly the Core Personal Consumption Expenditures Price Index, which the Fed uses as its main inflation indicator. Market participants are curious about how these numbers might affect future monetary policy, especially interest rates. Current market conditions suggest a cautious approach, with expectations for a rate cut in September significantly dropping. Gold demand grew by 3% year-on-year to 1,249 tonnes, driven by safe-haven investments. Central banks added 166 tonnes to their reserves, highlighting gold’s strategic value. Currently, gold prices are stabilizing between $3,250 and $3,450, indicating a possible continuation of this trading range. We expect gold to remain strong around $3,306 due to renewed trade worries following tariffs imposed on India and Brazil. This situation mirrors the start of the US-China trade disputes from the late 2010s, contributing to significant uncertainty. The small dip in the dollar is also supporting gold prices right now. The spotlight is now on the Federal Reserve, as the Core PCE inflation data for July 2025 came in at a slightly high 2.3%. This exceeds the Fed’s target and reduces hopes for a September interest rate cut, a shift already reflected in federal funds futures. This creates a complicated environment, as higher rates usually put downward pressure on gold prices.

Market Nervousness Rising

With increasing uncertainty, market nervousness is climbing. We can see this in the CBOE Volatility Index (VIX), which has risen to 18.5 from its lows last month. For derivative traders, it might be wise to buy options to take advantage of potential sharp price moves. A bull call spread on gold futures could allow us to benefit from a possible breakout above the $3,450 resistance level while managing our maximum risk. However, we need to be alert for any sudden easing of trade tensions or stronger-than-expected US job data. If a surprise agreement with India or Brazil occurs, gold’s safe-haven appeal might quickly diminish. In that case, having protective puts or starting bear put spreads could protect against a decline towards the $3,250 support level. The consistent purchasing by central banks, which have added another 166 tonnes to their reserves, continues to provide solid long-term support for gold prices. This ongoing demand makes us cautious about taking overly aggressive bearish positions. Over the next few weeks, we anticipate trading will likely stay volatile within the established $3,250 to $3,450 range. Create your live VT Markets account and start trading now.

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