In the early Asian trading on Monday (August 11), spot gold is still hovering around the 3400 mark and is currently trading at 3395.05.

Spot gold prices fluctuated narrowly last Friday, closing at $3,397.13 per ounce, nearly flat. Uncertainty over tariff policies and growing expectations of a Federal Reserve rate cut continued to support gold prices. However, U.S. gold futures experienced a period of rapid growth followed by a decline.

Last Friday, U.S. gold futures hit a record high of $3,534.10, but quickly fell back amid rumors that the White House was about to clarify its gold bar tariff policy, closing at around $3,458.2 per ounce, down about 0.7%.

The U.S. July CPI data will be released this week, and the market is paying close attention to it. Investors need to pay close attention. Surveys show that most analysts and retail investors tend to be bullish on the future of gold.

Tariff policy uncertainty

The latest round of volatility in the gold market is primarily driven by the US government’s potential adjustment to import tariffs on gold bars. A report from US Customs and Border Protection hinting at possible tariffs on gold bars imported from certain countries ignited market panic. Gold futures prices surged to a record high of $3,534.10 on Friday, exceeding expectations at one point. This surge stemmed from the fact that some gold refiners, including major Swiss entities, have suspended shipments of gold bars to the US due to policy uncertainty. This caused the spread between US gold futures and spot gold to widen dramatically, reaching over $100 early Friday morning before stabilizing around $60. While spot gold prices haven’t followed the same surge as futures prices, they have remained relatively high at $3,397.13, showing an overall sideways and volatile trend.

Switzerland, a global gold refining hub, is in ongoing tariff negotiations with the United States, with the 39% tariff on Swiss goods a key focus. If these tariffs persist, UBS analysts predict that the premium of New York gold prices relative to London will widen further, increasing arbitrage opportunities between global refining centers.

Ace Markets , pointedly noted that gold’s panic-driven rally demonstrates that even safe-haven assets are vulnerable to the chaos of the tariff era. This uncertainty not only disrupts supply chains but also amplifies investor concerns about a global trade war, driving a surge in funds into the gold market for shelter. The White House’s planned executive order clarifying its stance may calm market sentiment in the short term, but if the clarification falls short of expectations, gold price volatility will increase further.

Fed’s dovish turn

Parallel to the tariff storm, a subtle shift in attitude within the Federal Reserve has provided strong support for gold. In a recent speech, Fed Vice Chair Bowman emphasized that the latest employment data reinforces the case for three interest rate cuts this year. She noted that upside risks to inflation have diminished and that the Fed should proactively cut rates to prevent further deterioration in the labor market. Bowman and Fed Governor Waller opposed keeping interest rates unchanged at last month’s meeting, reflecting growing concerns among Fed policymakers about a slowing economy.

The Labor Department’s monthly jobs report showed the unemployment rate rose to 4.2% and job growth slowed sharply over the past three months to an average of 35,000 per month, well below the modest pace at the beginning of the year.

More Fed officials have joined the dovish camp: Atlanta Fed President Bostic said employment risks are higher than before, St. Louis Fed President Mousallem acknowledged risks to both the dual mandate (inflation and employment), and San Francisco Fed President Mary Daly expressed dissatisfaction with repeated decisions to hold interest rates. This shift came shortly after the Fed’s July decision to keep interest rates in the 4.25%-4.50% range, which was quickly overturned by weak data.

Financial markets reacted quickly, with traders betting on a 90% probability of a rate cut at the September meeting, with a reduction of at least 0.5 percentage points by year-end, and possibly as much as 58 basis points. While the Trump administration’s tariff policy could disrupt progress toward its 2% inflation target, dovish officials believe this is only a temporary setback and will not alter the need for rate cuts.

This expectation directly weakened the strong position of the US dollar. Although the US dollar index rose slightly by 0.2% to 98.25 points last Friday, it still fell by about 0.43% on a weekly basis. The weakening of the US dollar provides a natural benefit for gold, because gold is denominated in US dollars, and a depreciation of the US dollar tends to push up gold prices.

Shaun Osborne, chief foreign exchange strategist at Scotiabank, analyzed that the Federal Reserve may turn to interest rate cuts faster than the market expected, especially after Trump nominated the dovish Milan to serve as a member of the Federal Reserve Board, which further strengthened the market’s optimism.

Weak economic data and market linkage: multiple catalysts for gold

Weak economic data not only served as a catalyst for the Fed’s shift, but also directly impacted broader market dynamics, indirectly supporting gold. U.S. bond yields climbed, with the 10-year Treasury yield reaching 4.283%. However, this was more a reflection of weak demand at this week’s auction than a sign of economic recovery. Investors are closely watching next week’s inflation data, such as July’s CPI and PPI, to test whether Trump’s tariffs will reignite inflationary pressures. JPMorgan economists expect the Fed to cut interest rates by 25 basis points in September, citing signs of labor market weakness.

In the stock market, the Nasdaq Composite Index hit a new closing high, rising 0.98% to 21,450.02 points, driven by strong performance from tech stocks like Apple and hopes for interest rate cuts. Apple’s pledge of an additional $100 billion in investment further boosted market confidence. However, the stock market’s optimism did not completely mask underlying economic concerns. Trump’s dismissal of Labor Department officials and his questioning of data authenticity have raised concerns about government intervention. This has, to some extent, enhanced gold’s safe-haven appeal, as it often serves as a preferred haven for capital in an environment of economic slowdown and political uncertainty.

Bullish sentiment dominates the market

Kitco News’ weekly gold survey shows that industry experts and retail traders remain optimistic about the short-term outlook for gold. Of the 10 analysts surveyed, six are bullish on gold prices rising in the coming week, only one predicts a decline, and the rest are neutral. Darin Newsom, senior market analyst at Barchart, believes that trade policy uncertainty will drive gold prices higher. Forex strategist James Stanley highlights the key resistance level of $3,435 and sees $3,500 as the next major hurdle.

Ole Hansen of Saxon Bank warned against over-interpreting the futures breakout, as spot prices still need to break through $3,450 to confirm a trend reversal. Sean Lusk of Walsh Trading pointed out that if it falls below $3,400, gold prices may fall back to $3,280; otherwise, the target is $3,690-3,697.

A survey of retail investors also showed a bullish bias, with 129 of 188 votes predicting an increase. This consensus stems from gold’s positioning amid global uncertainty: tariffs increase recession risks, while easing employment and rising inflation support high gold prices. Eugenia Mikuliak of B2PRIME Group concluded that Swiss gold bar tariffs threaten trade flows, with futures surging to $3,534 and spot prices remaining high, and that overall uncertainty is positive for gold.

This week’s outlook: Inflation data becomes a litmus test for gold prices

Looking ahead, economic data will once again be in focus. Tuesday’s July CPI report from the US is expected to show core inflation rising to 0.3%, while Thursday’s PPI is expected to rise by 0.2%. Friday’s retail sales and consumer confidence index will also shed light on the economic situation. If these data show moderate inflation, it will reinforce expectations of rate cuts and push gold prices above their current range. Conversely, if it rises beyond expectations, it may trigger a short-term correction but will not shake the overall bullish outlook. The Reserve Bank of Australia’s decision to cut interest rates will also influence global sentiment. Experts such as Mark Chandler of Bannockburn Global FX expect gold prices to test $3,410 before retreating, but $3,355 remains a low-risk entry point.

In summary, gold is at a critical turning point, driven by both tariff uncertainty and the Federal Reserve’s rate cuts. While short-term volatility is inevitable, its safe-haven nature and market consensus suggest that gold prices are likely to continue their upward momentum and even challenge higher levels. Investors should closely monitor policy clarifications and data releases, as well as news related to the Russia-Ukraine geopolitical situation this week.

US President Trump will meet with Russian President Vladimir Putin in Alaska on August 15 to discuss the Ukraine crisis. This will be the first face-to-face meeting between the US and Russian leaders since June 2021 and their second since their meeting at the G20 summit in 2019. Analysts believe the two leaders agreed to the meeting for their respective political and strategic considerations. Given the significant differences between the three parties, a ceasefire between Russia and Ukraine is unlikely to be achieved overnight.