Gold prices dipped on Wednesday, influenced by a slightly stronger dollar, as investors hesitated to make significant commitments ahead of U.S. President Donald Trump’s forthcoming decisions regarding Federal Reserve appointments.
In Dubai, gold rates saw a slight decline, with 24-carat gold priced at AED407.00 and 21-carat gold falling to AED377.00. Furthermore, 21-carat gold adjusted downward to AED361.50, while 18-carat gold decreased to AED309.75.
Spot gold was down 0.1 percent at $3,376.01 per ounce, as of 03:12 GMT, following a near two-week high achieved on Tuesday. Spot gold is currently trading above $3,374.6. Meanwhile, U.S. gold futures declined by 0.1 percent to $3,431.10 (currently trading above $3,429.3). The dollar rebounded from a one-week low reached in the prior session, diminishing gold’s attractiveness to holders of other currencies.
Trade tensions with India
On Tuesday, Trump indicated that he would soon announce decisions regarding a short-term substitute for Fed Governor Adriana Kugler, who resigned on Friday, as well as his selection for the next Fed chair. The CME FedWatch tool currently estimates the likelihood of a September rate cut at nearly 87 percent, following last Friday’s disappointing employment growth data, which prompted Trump to dismiss the commissioner of the U.S. Bureau of Labor Statistics (BLS).
Trump has eliminated Secretary of the Treasury Scott Bessent from consideration as his choice to succeed Federal Reserve Chair Jerome Powell.
Trump, who has consistently criticized Powell for not acting swiftly enough to reduce interest rates, stated on Tuesday that Bessent preferred to remain in his current position. “I love Scott, but he wants to stay where he is,” Trump remarked during an interview with CNBC, noting that Bessent was performing a “great job” and had conveyed to him just the day before that he did not seek the chairmanship.
The president indicated that he has four potential candidates in mind to replace Powell, whose term concludes in May. Among them are Kevin Warsh, a former member of the Fed’s seven-member board of governors, and Kevin Hassett, the director of the White House National Economic Council.
Trump mentioned that he might take advantage of the opportunity to fill the vacancy left by Adriana D Kugler, who announced her early resignation from the board last week. This would allow him to install his choice for chair on the board prior to Powell’s exit.
“I’m going to make the decision soon,” Trump added.
In trade matters, Trump reiterated threats to increase tariffs on goods imported from India due to its purchases of Russian oil, while New Delhi labeled his remarks as “unjustified” and pledged to safeguard its economic interests, further straining the trade relationship between the two nations.
In other news, the Perth Mint reported a 33 percent decline in gold product sales for July compared to the previous month, while silver sales dropped to a six-month low, according to the refiner’s statement on Wednesday. Spot silver remained steady at $37.82 per ounce, platinum decreased by 0.5 percent to $1,313.94, and palladium fell by 1 percent to $1,164.15.
Fed rate cut probabilities
Recent figures from the World Gold Council and Trading Economics indicate that gold prices have risen by over 41 percent compared to the same period last year, reaching around $3,375 per ounce on August 6, 2025, although showing minor daily fluctuations.
According to the CME FedWatch Tool, the probability of a Federal Reserve rate cut at the September 2025 FOMC meeting surged to 82.6 percent or higher, driven by the unexpectedly weak July nonfarm payroll report and ongoing uncertainty about Fed leadership appointments. These forecasts are closely tracked by market participants as they gauge the likely direction of U.S. monetary policy.
For the full month, Perth Mint released its official report stating that July gold sales dropped to 21,891 ounces, a 33 percent decrease from June, while silver sales also declined 2.5 percent month-on-month to 452,132 ounces—marking the lowest monthly sales for both metals so far in 2025. The Perth Mint, owned by the Government of Western Australia and the world’s largest producer of newly mined gold, attributed the drop partly to typical seasonal slowdowns and softer safe-haven demand as global trade tensions momentarily eased.
Institutional analysts, including those from ING and TD Securities, now forecast the average gold price for the remainder of 2025 at $3,500–3,675 per ounce, pointing to continued support from geopolitical tensions, persistent U.S. policy uncertainty, and sustained central bank demand, especially from countries like China, whose gold holdings rose to 2,640 tons earlier this year.
Meanwhile, the U.S. trade deficit shrank to a 21-month low, according to the Commerce Department, but service sector growth slowed as indicated by the sharp decline in the ISM Services PMI to 50.1, which has contributed to volatile sentiment in precious metals markets.
Trump’s tariff suggestion sparks copper surge
Ole Hansen, head of Commodity Strategy, Saxo Bank, highlighted in an analysis reviewed by Economy Middle East, that, “Precious metals spent July consolidating their first-half gains. Silver and platinum extended their rallies, regaining some ground versus gold, which continues to trade in a narrow range after hitting a record high of $3,500 in April. Platinum briefly reached a year-to-date gain of 61 percent, while silver came close to $40—its highest since 2011, though still below the all-time peak of $50.”
“Also supporting silver and platinum early in the month was a surge in High-Grade copper prices in New York, which hit a record $5.8955/lb on July 8. This followed President Trump’s surprise suggestion of a 50 percent tariff on copper imports—double what markets had priced in. The remark drove the premium over LME copper in London to a record 34 percent, sparking a rush to ship copper into the U.S. ahead of the deadline.”
“That trade unraveled last week when Trump, in a sudden reversal, announced that refined copper—traded on futures exchanges—would be excluded from the tariff until at least January 2027. The New York premium collapsed within minutes, leaving traders nursing losses and U.S. warehouses with copper inventories at a 21-year high. With imports set to dry up, U.S. prices may now fall below global benchmarks to clear the excess,” further noted Hansen.
“While New York copper grabbed headlines, LME copper remained relatively stable, trading around $9,550 per ton ($4.33/lb). Our medium- to long-term bullish view remains unchanged. The tariff reversal only underscores copper’s strategic role in the global energy and digital transition. Demand is expected to rise sharply due to the electrification of transport, industrial reshoring, and rapid expansion of AI-driven data centers.”
Are we at the end of the rally?
Hansen indicated that supply continues to be limited due to underinvestment and recent disruptions, such as a mining accident in Chile. Consequently, copper prices are expected to remain volatile, with a tendency to rise, driven by both short-term momentum and long-term structural factors. He suggested that copper is increasingly becoming the defining commodity of the energy and digital age.
“After a stellar first half, investment metals entered a consolidation phase in July, with some volatility triggered by copper’s sharp moves. Gold has traded sideways for four months, allowing silver and platinum to catch up. With year-to-date gains near 27 percnert for gold and silver and nearly 50 percent for platinum, investors are naturally asking: is the rally over?”
“We don’t believe so. Recent data weakness in the U.S. has reopened the door for Fed rate cuts. Friday’s dismal jobs report, including sharp downward revisions to prior months, has led markets to almost fully price in a cut at the next FOMC meeting on 17 September, with more expected into 2026. The effective Fed funds rate is now seen 125 basis points lower by next September,” he further noted.
Hansen also pointed out that the key drivers behind the rise in metal prices in recent years are still in place, and additional supportive factors may develop in the second half of the year. He highlighted that the potential for lower U.S. interest rates could boost demand, particularly for metal-backed ETFs, by diminishing the opportunity cost of holding non-yielding assets like precious metals compared to short-dated government bonds.
“To understand gold’s enduring appeal—and by extension, that of silver and platinum—it’s important to recognise what sets these metals apart. Precious metals are politically neutral, unlike sovereign bonds or fiat currencies. They are universally recognised as a store of value, not tied to the creditworthiness of any nation, which is why central banks are increasingly allocating to gold as a core reserve asset,” Hansen concluded.
