The U.S. dollar index (DXY) surged to its highest level since May 29, making gold more expensive for non-dollar holders. This currency pressure has reinforced bearish momentum for gold in the short term, with traders cautious following another firm set of U.S. macro readings. The Federal Reserve left its benchmark rate unchanged at 4.25%-4.50% on Wednesday and gave no signal for a September rate cut.

Recent U.S. economic data—GDP, jobless claims, and PCE inflation—all supported the Fed’s hawkish hold, reinforcing reluctance to pivot dovishly. “Gold remains weighed by reduced bets for Fed rate cuts for the rest of 2025,” said Han Tan, chief market analyst at Nemo.Money.

Tariff Uncertainty Provides Some Underlying Support

While the macro backdrop leans bearish for gold, geopolitical risks are offering partial support. Former President Donald Trump reintroduced aggressive tariffs targeting Canada, Brazil, India, and Taiwan—moves that could drag on global economic growth and potentially lift safe-haven demand.

June inflation data already reflected early tariff impacts, with price increases on some imported goods. The full economic implications remain unclear, but growing trade tensions could eventually support gold as investors hedge broader global risk.

Physical Demand in Asia Improves but Volatility Keeps Buyers Cautious

Physical gold demand picked up in Asia this week as lower spot prices spurred buying interest, especially from Indian and Chinese markets. However, continued price swings and weak sentiment prevented a stronger rebound in physical flows. With gold hovering below key technical levels, retail interest remains tepid.

Gold Prices Forecast: Short-Term Bearish, Long-Term Bullish Bias Intact