The recent minutes from the Federal Open Market Committee (FOMC) meeting held on June 17-18 revealed a range of opinions among the voting members.
There was a clear division regarding monetary policy, with two members distinctly advocating for a rate cut in July. The majority anticipate at least one reduction in interest rates, although a few members oppose any easing this year.
The combination of slowing economic activity, weaker labour market conditions, and the heightened risk of inflation aggravated by trade and tariff barriers presents a challenging scenario. Currently, the market is estimating a 63% chance of a US rate cut in September. Overall, the impact of inflation appears to be softer than previously anticipated, leading to a focus next week on the US Consumer Price Index (CPI), which is expected to show a slight increase.
Trade tensions are intensifying following President Trump’s announcement of increased tariffs on Brazil and Canada.
In response, Brazil’s President has declared reciprocal measures, refusing to yield to external pressure.
Starting next month, Trump has already planned to raise the tariff on Canadian imports from 25% to 35%. Canada is the largest trading partner of the US.
Notices concerning tariffs have been issued to 23 countries, averaging 25% of the total annual US imports, which amounts to around $ 830 billion.
Additionally, copper prices have surged following the announcement of a 50% tariff on imports to the US, set to take effect on August 1. It is feared that rising copper prices will lead to higher inflation.
However, negotiations between the US and the European Union are still ongoing, concerning auto tariffs that may lead to the introduction of a quota system aimed at protecting the European market.
Amid a lack of new economic data last week, the market remained focused on unresolved tariff issues.
It’s clear that gold has benefited from the escalating tariff tensions between the United States and its trading partners, as prices have risen over the last three days leading up to the weekend.
One thing is certain that the delayed decision making or absence of a definite announcement regarding tariffs has increased confusion in the discussions and has supported gold’s appeal due to its status as a safe haven.
Moving forward, much will hinge on the results of tariff and trade negotiations, which will be the next influential factor for gold. The price of gold could still rise due to delays and a lack of clarity surrounding an agreement. However, the potential for a downward trend remains significant. There is a risk that gold may seek any small justification to drop, which could be substantial.
In recent months, gold has been trading within a specific range. A decrease in geopolitical tensions has shifted the market’s focus toward trade and tariff-related matters.
Additionally, central bank purchases appear to be less aggressive, which haven’t helped elevate gold prices.
In the recent times market also faced with liquidity challenges, which is partly why the USD has weakened against major currencies. Although the USD index saw gains last week, it has overall declined to 97.53.
Following a quiet week, the market will be anticipating the release of economic data. The June CPI report and the Empire State Manufacturing Survey will be available on Tuesday. Manufacturing Survey results and PPI figures will come out on Wednesday. Thursday will feature Retail Sales data, the Philly Fed Manufacturing Survey, and weekly jobless claims. Finally, on Friday, the statistics department will share the June Housing Starts and the preliminary University of Michigan Consumer Sentiment survey.
WEEKLY OUTLOOK - July 14-18
GOLD @ $ 3356— Gold is likely to initially find support around $ 3338-43, which may lead to an upward movement targeting $ 3368-73. A break above this range would suggest a test of the $ 3388-92 levels. However, if support is broken, it could lead to a decline in gold prices towards $ 3310.
EURO @ 1.1690— Euro has a support at 1.1620. A move upward is possible, and if it breaks 1.1798, it may rally to 1.1850. Otherwise, keep an eye on 1.1570.
GBP @ 1.3501— Pound Sterling continued to be weak as a result of the softer economic conditions in the U.K. It must surpass 1.3605 to reach 1.3650. However, if it cannot maintain support at 1.3440, it may fall to 1.3380 levels.
JPY @ 147.42— Ongoing unresolved trade issues with the USA are negatively impacting the Japanese currency. USD has resistance at 148.50, which must be surpassed to reach 149.80 or else US Dollar will fall. However, if 146.10-20 support level is breached, it could lead to a decline in the USD towards 145.
Copyright Business Recorder, 2025
The writer is former Country Treasurer of Chase Manhattan Bank. The views expressed in this article are not necessarily those of the newspaper
He tweets @asadcmka
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