Gold Prices Surge to Two-Week High Amidst Trade Tensions and Fed Uncertainty
Global gold prices experienced a notable 1% increase, reaching their highest point in two weeks and closing the trading week above the $3350 per ounce resistance level. Technical indicators, including the momentum index, suggest a continued upward trend for gold prices in the near future.
This rally in gold comes as global stocks retreated following an escalation in trade disputes. U.S. President Donald Trump intensified his criticism of Canada, announcing plans to impose a 35% tariff on Canadian imports and indicating similar tariffs of 15% to 20% on goods from other trading partners.
Simultaneously occurring, the federal Reserve’s stance on interest rates remains a key factor influencing market sentiment. The consumer price index has contributed to a stable outlook for the Federal Reserve’s monetary policy, with no important indication of further interest rate reductions. This cautious approach is partly attributed to the ongoing uncertainty surrounding Trump’s tariff policies.
President Trump has previously voiced his opinion on interest rates,suggesting they shoudl be at or below 1%. While markets are anticipating a potential 50 basis point rate cut by the end of the year, with the first reduction expected in September, the Federal Reserve’s actions are being closely watched amidst these economic crosscurrents.
In terms of investment flows, the World Gold Council reported that for the week ending July 4th, traded investment funds backed by physical gold saw net inflows of 3.9 tons. This figure represents a decrease compared to the previous three weeks. The decline in inflows is primarily linked to a significant outflow of 7.6 tons from North American investment funds. Conversely, European and Asian funds experienced increased inflows, totaling 6.5 tons and 5.1 tons, respectively.
