Gold Price Forecast: XAU/USD holds losses below $3,300 as Trump sets baseline tariff rate of 10%
- Gold price edges lower to around $3,285 in Friday’s early Asian session.
- Trump kept the minimum global tariff rates at 10%.
- The US employment data for July will take center stage later on Friday.
The Gold price (XAU/USD) trades in negative territory near $3,285 during the early Asian trading hours on Friday. The precious metal loses ground amid the rebound in the US Dollar (USD) after US President Donald Trump announces fresh tariff deals with trade partners.
The White House late Thursday stated that Trump will set a baseline tariff rate of 10%, resisting prior suggestions he could raise the floor to 15% or higher, per Bloomberg. Additionally, Trump has signed an executive order increasing the tariff on Canada from 25% to 35%, effective on August 1, 2025. Trump extended Mexico’s current tariff rates for 90 days to allow more time for trade negotiations.
Traders continue to assess the developments surrounding US tariffs ahead of the US employment data for July, which will be published later on Friday. The US economy is projected to add 110K jobs in July, while the Unemployment Rate is expected to rise to 4.2% from 4.1% during the same period.
A hawkish stance from the US Federal Reserve (Fed) could weigh on the non-yielding yellow metal in the near term. The US central bank kept rates steady at its July meeting on Wednesday, and Fed Chair Jerome Powell said the Fed needed to wait for more data before deciding whether to adjust rates in September. However, any signs of trade tensions or escalating geopolitical tensions could boost the safe-haven flows and help limit the gold’s losses.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Author
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
