Gold prices edged up on Tuesday following a significant drop in the previous session, as investors anticipated U.S. inflation data that may provide more clarity on the Federal Reserve’s rate-cut plans.
In Dubai, gold rates climbed, with 24-carat gold rising by AED2.00 to AED406.75. Similarly, 22-carat gold increased by AED200 to AED376.75. Additionally, 21-carat gold gained AED1.75, reaching AED361.25, while 18-carat gold rose by AED1.50 to AED309.50.
Spot gold rose by 0.2 percent to $3,354.35 per ounce, while U.S. gold futures for December delivery remained stable at $3,404.72.
Presidential assurance on gold imports
Bullion markets exhaled in relief after U.S. President Donald Trump announced that gold imports would not face tariffs, effectively ending days of uncertainty that had unsettled global markets. This announcement came in response to confusion sparked by a U.S. Customs and Border Protection letter suggesting that standard gold bars of one kilogram and 100 ounces—a crucial format for bullion trade, particularly from Switzerland—could be subject to reciprocal tariffs as high as 39%. The prospect of these tariffs had driven gold futures to record highs, as fears mounted over disrupted global supply chains and increased costs for bullion traders.
Trump addressed the issue directly in a statement on his social media platform, Truth Social, declaring, “Gold will not be Tariffed!” although he did not elaborate. The White House later confirmed it was drafting an executive order to clarify misinformation regarding tariffs on gold bars and other specialty products. This presidential intervention calmed market turmoil and alleviated concerns about trade barriers on gold, a vital investment metal for many central banks and investors seeking protection against inflation.
In the wake of the announcement, gold futures pulled back from their peaks, with market attention shifting back to economic indicators such as U.S. inflation data and signals from the Federal Reserve. Analysts observed that the removal of tariff uncertainty allowed the market to adjust more comfortably to interest rate expectations rather than trade risks. This resolution was deemed crucial, as a tariff on gold—especially on Swiss-imported bullion bars, which dominate U.S. imports—could have had “incalculable” negative consequences for global bullion markets and supply chains.
Focus on CPI and Fed rate cut expectations
Gold prices fell 1.6 percent on Monday, with futures dropping over 2 percent after U.S. President Donald Trump announced that tariffs would not be imposed on imported gold bars, alleviating market concerns.
Attention is now focused on the upcoming U.S. Consumer Price Index (CPI) data, scheduled for release at 12:30 GMT. Economists surveyed by Reuters expect core CPI to have increased by 0.3 percent in July, raising the annual rate to 3 percent, moving further away from the Federal Reserve’s target of 2 percent.
Traders are anticipating an approximately 85 percent likelihood of a Fed rate cut next month, according to the CME FedWatch Tool. Gold typically performs well during periods of uncertainty and low interest rates. Trump has consistently criticized the Fed for not reducing rates in recent meetings, and the market is also watching for his successor to current Chair Jerome Powell, whose term ends next May.
Traders showed little response to a White House statement that Trump signed an executive order on Monday, extending a pause on significantly higher U.S. tariffs on Chinese imports for another 90 days.
In other markets, spot silver increased by 0.6 percent to $37.81 per ounce, platinum gained 0.6 percent to $1,334.24, and palladium rose 0.7 percent to $1,143.93.
Regarding monetary policy, Federal Reserve Governor Michelle Bowman has maintained an outlook for three interest rate cuts before the end of 2025, a stance consistent since last December 2024, although she emphasized policy flexibility depending on evolving economic data. The CME FedWatch Tool currently estimates a 43.5% probability of the federal funds rate ranging between 3.75% and 4.00% by December 2025, implying potentially two rate cuts this year. The Fed’s policy decisions will be closely tied to incoming data on inflation, labor market conditions, and economic growth.
