Fed Stays Cautious as Rate Cut Hopes Fade

The Federal Reserve’s stance remains a key pressure point for bullion markets. Following a stronger-than-expected U.S. jobs report for June, market participants have pared back expectations of a July rate cut.

The CME FedWatch tool indicates that traders are now pricing in just a 20% probability of a cut at the upcoming meeting, with most expectations being deferred to October or later.

“Investors are holding back ahead of the FOMC minutes, looking for any deviation from the Fed’s cautious tone,” said a senior strategist at Wells Fargo. Meanwhile, 10-year Treasury yields rose above 4.3%, reinforcing dollar strength and keeping gold bulls at bay.

Trump’s Tariff Threats Stir Market Volatility

Former President Donald Trump’s announcement of new tariffs, set to take effect on August 1, has added to concerns about inflation. Proposed duties include up to 200% on foreign pharmaceuticals and 50% on imported copper. These aggressive measures have reignited fears of global supply chain disruptions and added to broader economic uncertainty.

Despite downward price action, demand for gold as a safe haven has not fully evaporated. Risk sentiment in equity markets remains fragile, offering limited downside protection for gold as geopolitical tensions and trade policy risks mount.

All Eyes on FOMC Minutes for Market Direction

Traders await the release of the Federal Open Market Committee (FOMC) minutes later today. With markets still anticipating up to 50 basis points in cuts by year-end, any shift in tone could spark significant price action across precious metals. Until then, gold and silver remain vulnerable to further downside, contingent on dollar momentum and bond market signals.