Gold dips as dollar strengthens, but rate cut hopes may lift prices in coming weeks
TOI World Desk | TIMESOFINDIA.COM | Aug 05, 2025, 23:45 IST
( Image credit : TIL Creatives )
Gold prices experienced a slight decrease due to a stronger U.S. dollar, despite remaining near a two-week high. Weakening U.S. economic data has increased expectations of a Federal Reserve rate cut, potentially supporting gold's appeal. Political uncertainty, including potential changes in Fed leadership and renewed tariff threats, further influences market sentiment, while other precious metals showed mixed performance.
Gold prices took a dip on Tuesday, despite staying near a two-week high, as the U.S. dollar saw a modest rebound. Spot gold fell 0.2% to $3,365.45 per ounce after touching a high of $3,385.29 the previous day. Meanwhile, U.S. gold futures remained steady at $3,423.20 per ounce. The pullback was primarily influenced by a strengthening dollar, which rose 0.2% from its recent one-week low. This made gold less attractive to investors holding other currencies, slightly dampening demand.
The gold market remains sensitive to macroeconomic indicators and central bank policy expectations. Recently released U.S. data indicated that employment growth slowed more than expected in July. Moreover, revisions to May and June payrolls slashed 258,000 jobs from earlier estimates — signaling deeper weaknesses in the labor market than previously acknowledged. These developments boosted expectations of an interest rate cut by the Federal Reserve in September. According to the CME FedWatch tool, there is now an 88% chance of a September rate cut, a significant jump from 63% just a week ago.
Analysts say that gold is still well-positioned for further gains if U.S. economic data continues to disappoint. UBS commodity analyst Giovanni Staunovo noted that another round of weak economic indicators or clarity on the next Federal Reserve governor could push gold prices higher. Adding to the political uncertainty, former President Donald Trump recently dismissed the head of the U.S. labor statistics department and announced plans to appoint a new Fed governor — possibly as a successor to current chairman Jerome Powell. These moves, along with Trump’s renewed tariff threats against India over continued purchases of Russian oil, have added to global market jitters.
Historically viewed as a safe haven during times of political and economic instability, gold tends to perform well in a low-interest-rate environment. However, some analysts caution that unless there is a clear catalyst, gold may face resistance around the $3,450 mark. Kelvin Wong, a senior analyst at OANDA, noted that traders are unlikely to push prices beyond that threshold without more definitive news or policy shifts.
In related markets, other precious metals showed mixed performance. Spot silver inched up 0.2% to $37.46 per ounce, while platinum dropped 1.3% to $1,312.30 and palladium declined 1.6% to $1,187.04. Meanwhile, South African miner Sibanye-Stillwater has urged the U.S. government to impose tariffs on Russian palladium imports in a bid to protect domestic producers and enhance supply security.
The gold market remains sensitive to macroeconomic indicators and central bank policy expectations. Recently released U.S. data indicated that employment growth slowed more than expected in July. Moreover, revisions to May and June payrolls slashed 258,000 jobs from earlier estimates — signaling deeper weaknesses in the labor market than previously acknowledged. These developments boosted expectations of an interest rate cut by the Federal Reserve in September. According to the CME FedWatch tool, there is now an 88% chance of a September rate cut, a significant jump from 63% just a week ago.
Analysts say that gold is still well-positioned for further gains if U.S. economic data continues to disappoint. UBS commodity analyst Giovanni Staunovo noted that another round of weak economic indicators or clarity on the next Federal Reserve governor could push gold prices higher. Adding to the political uncertainty, former President Donald Trump recently dismissed the head of the U.S. labor statistics department and announced plans to appoint a new Fed governor — possibly as a successor to current chairman Jerome Powell. These moves, along with Trump’s renewed tariff threats against India over continued purchases of Russian oil, have added to global market jitters.
Historically viewed as a safe haven during times of political and economic instability, gold tends to perform well in a low-interest-rate environment. However, some analysts caution that unless there is a clear catalyst, gold may face resistance around the $3,450 mark. Kelvin Wong, a senior analyst at OANDA, noted that traders are unlikely to push prices beyond that threshold without more definitive news or policy shifts.
In related markets, other precious metals showed mixed performance. Spot silver inched up 0.2% to $37.46 per ounce, while platinum dropped 1.3% to $1,312.30 and palladium declined 1.6% to $1,187.04. Meanwhile, South African miner Sibanye-Stillwater has urged the U.S. government to impose tariffs on Russian palladium imports in a bid to protect domestic producers and enhance supply security.