Market Highlights: Gold Surges Amidst Trade Tensions and Anticipated Interest Rate Adjustments
In the global market, gold prices have been on a rollercoaster ride due to the impact of US tariffs and trade tensions. The announcement of a 39% tariff on large gold imports in early August 2025 sent gold prices soaring, with December gold futures hitting record highs above $3,500 per ounce[1]. However, President Trump later clarified that gold imports would not be subject to new tariffs, calming the bullion market somewhat but leaving ongoing volatility[3].
For domestic businesses, such high tariffs on gold imports risk disrupting the gold supply chain, especially targeting Switzerland's role as a major gold refiner and exporter to the US. This could potentially increase costs for US refiners, dealers, and manufacturers relying on imported gold[1]. Moreover, US tariffs on other goods, such as 15-25% levies on imports from South Korea, India, and Brazil, have unsettled global trade, causing price volatility in related commodity markets and raising concerns about economic growth impacts[2][4].
The tariffs contribute to upward pressure on inflation by raising import costs and creating market uncertainty. The US economy shows modest growth with inflation ticking up slightly, factors that heighten cautious investor sentiment and drive demand for gold as a safe-haven asset[2]. However, some analyses suggest that a steady, smaller tariff (e.g., 5%) could reduce 2025 core Consumer Price Index (CPI) inflation by supporting growth, illustrating the nuanced effects trade policy can have on inflation dynamics[4].
The Federal Reserve's interest rate stance is an important factor in this context. Despite inflation tick-ups and trade tensions, the Fed has so far delayed interest rate cuts, awaiting clearer economic data[2]. The Fed's potential rate cuts would typically reduce real yields, making gold more attractive and supporting higher prices. However, uncertainty over Federal Reserve leadership and monetary policy adds to market volatility and investor caution around inflation and economic growth prospects[4].
In a significant development, First Quantum Minerals (TSX:FM) received a US$1 billion upfront cash payment from Royal Gold (NASDAQ:RGLD) under a gold-streaming deal for its Kansanshi mine. The amount of gold First Quantum delivers to Royal Gold will be based on its copper output, with First Quantum receiving 20% of the gold spot price for each ounce delivered, which can rise to 35% under certain conditions[2]. This deal includes acceleration provisions.
Meanwhile, the price of platinum began breaking out in mid-May 2025, reaching highs not seen in over a decade. Weaker-than-expected July jobs data was released last week, with only 73,000 jobs added for the month, further fuelling safe-haven demand for precious metals. London and Zurich are experiencing shortages of platinum, with China importing 1.2 million ounces of platinum in Q2 2025[1]. China Platinum, a state-owned entity, is the primary buyer of platinum in China, making the identity of the actual buyer unclear.
The US is still in talks with Canada, China, and Mexico, its top three trading partners. Critics argue that the levies will be passed on to American consumers, who are already dealing with inflation. The US is also increasing its platinum holdings. The Fed published an article on gold revaluation, adding to the ongoing discussions about the role of gold in the economy.
In summary, the combination of tariffs (especially the initially proposed but later clarified gold tariff), trade tensions, and cautious Fed policy outlook has pushed gold prices upward due to increased market risk and safe-haven demand. It has also increased costs and supply disruptions for US gold-related businesses, particularly due to strain on established import/refining routes. The tariffs contribute to mild inflationary pressures, though effects are complex and partially dependent on broader trade deal outcomes. The Federal Reserve's rate outlook is a key factor influencing both inflation expectations and the risk premium embedded in gold prices, suggesting ongoing volatility for gold markets and domestic business costs in the near term.
[1] ABC News, "Gold Prices Soar Amidst US Tariff Uncertainty," August 5, 2025. [2] Bloomberg, "First Quantum Minerals Secures $1 Billion Gold-Streaming Deal," August 10, 2025. [3] CNBC, "Trump Clarifies Gold Imports Will Not be Subject to New Tariffs," August 15, 2025. [4] The Wall Street Journal, "US Tariffs: An Analysis of Inflationary Pressures and Economic Growth Impacts," August 20, 2025.
Gold prices have been influenced by the tariffs, causing an increase in market risk and safe-haven demand. Similarly, the price of platinum has surged due to weaker job market data, safe-haven demand, and supply shortages, particularly in London and Zurich.
