Gold edges higher as Trump announces the latest round of tariffs ahead of Fed Minutes
- Gold price rebounds above $3,300 ahead of Fed Minutes scheduled for 18:00 GMT.
- President Trump announces the latest round of tariffs, fuelling fresh demand for safe-haven bullion.
- XAU/USD rebounds off triangle support, with the 50-day SMA providing resistance at $3,321.
Gold (XAU/USD) is edging higher after a mild pullback on Wednesday as US President Trump announces the latest round of tariffs, expected to take effect in August.
With markets awaiting the release of the Fed Minutes scheduled for 18:00 GMT, the US Dollar has weakened, allowing XAU/USD to trade above $3,300 at the time of writing.
On Truth Social, Trump announced that imports from Iraq, Libya, and Algeria to the US will face a 30% tariff rate, while levies on imports from the Philippines will be set at 20%.
Meanwhile, the upcoming release of the FOMC Minutes from the June meeting is expected to shed light on the Fed’s internal debate over the path of monetary policy.
In June, the central bank opted to maintain its benchmark interest rate at 4.25% to 4.50%, citing a resilient labor market and lingering inflation pressures.
Last week’s Nonfarm Payrolls (NFP) report reinforced that outlook, showing continued strength in employment and reducing expectations for a near-term rate cut. As a result, yields have firmed across the curve, further strengthening the USD and weighing on Gold.
Gold typically shares an inverse relationship with the US Dollar and interest rates. When yields rise, interest-bearing assets become more attractive relative to Gold, which does not offer a yield. This dynamic has continued to pressure bullion in recent sessions.
Daily digest market movers: Gold hinges on Fed outlook and trade policy
- According to the CME FedWatch Tool, markets are pricing in a 62.9% probability for a 25-basis-point rate cut in September. So far this year, the Fed has maintained interest rates within the 4.25%-4.50% range, supported by a resilient labour market.
- Meanwhile, President Trump continues to criticize Fed Chair Jerome Powell. On Tuesday, Trump called for his “Immediate resignation”. On Truth Social, Trump stated, “Rates should have been cut months ago. The only reason they’re not is because Powell doesn’t want me to win.” These remarks reflect Trump's long-standing frustration with Powell, which began during his first term and has intensified as monetary policy remains tight.
- On tariffs, the Trump Administration has hinted at imposing a 50% tariff rate on Copper imports to the US and a potential 200% levy on pharmaceutical products.
- Letters outlining the reciprocal tariff rates that the Trump administration aims to impose on imports to the US continue to be sent to trading partners of the World’s largest economy.
- This has reignited concerns over the potential economic implications of the levy increase.
- At a Cabinet Meeting on Tuesday, Trump reiterated that there would be no further extension to the fresh tariff deadline on August 1. “Everybody has to pay. And the incentive is that they have the right to deal in the United States. ”Trump wrote on Truth Social that “TARIFFS WILL START BEING PAID ON AUGUST 1, 2025. There has been no change to this date, and there will be no change.”
- On Monday, 14 letters were sent to countries, including Japan and South Korea, outlining the fresh tariff rate. On Tuesday, US Commerce Secretary Howard Lutnick told CNBC that an additional 15 -20 letters were scheduled to be sent to global leaders by Wednesday.
- Trump also threatened BRICS with an additional 10 % tariff. BRICS nations collaborate on various issues, including trade, investment, finance, and sustainable development. They aim to increase their influence in global economic and political affairs. The bloc also holds annual summits to discuss and coordinate strategies for mutual support and growth.
Gold technical analysis: XAU/USD lingers above $3,300
Gold (XAU/USD) is attempting a recovery after reaching a one-week low on Wednesday, which pushed the price to the lower boundary of a symmetrical triangle pattern.
The 38.2% Fibonacci retracement level at $3,292 of the April rally, which has served as a key short-term support level over recent weeks, currently remains intact.
Gold (XAU/USD) daily chart
A sustained move below this level could expose Gold to further losses, targeting the 50% Fibo level at $3,228, followed by $3,164.
On the upside, resistance is aligned at the 50-day Simple Moving Average (SMA) at $3,321 and the 20-day SMA at $3,345.
The 23.6% retracement level is providing an additional barrier of resistance at $3,372, with a move higher opening the door for the $3,400 round number.
The Relative Strength Index (RSI) is holding near 44, reinforcing the emergence of bearish momentum.
The metal’s failure to hold above its moving averages and the triangle apex favour downside continuation, unless bulls can convincingly gain traction above $3,345.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
Author
Tammy Da Costa, CFTe®
FXStreet
Tammy is an economist and market analyst with a deep passion for financial markets, particularly commodities and geopolitics.
