The month of July 2025 displayed a two-way trend for bullion, offering both buyers and sellers opportunities to book profits. Bullion began the month in a range-bound manner as investors assessed US Federal Reserve Chair Jerome Powell’s cautious stance on rate cuts. Meanwhile, a weaker US Dollar Index lent support to the greenback-priced metal.
Soon, the trend shifted, and gold prices reacted sharply to a series of unexpected announcements from US President Donald Trump.
Gold prices surged after the US Senate, controlled by Republicans, passed a wide-ranging tax-cut and spending bill, dubbed the “big, beautiful bill.” The bill proposed significant cuts to several social service programs and was projected to add $3 trillion to the fiscal deficit over the next decade. This raised fiscal concerns and drove investors toward the safe-haven asset—gold.
In addition, President Trump rattled global markets by announcing a wave of tariffs on various countries: 50% on US copper imports, 35% on imports from Canada, blanket duties of 15–20% on most other trade partners, and 30% on imports from Mexico and the European Union, all effective from August 1. These measures followed failed trade negotiations with major US partners.
The European Union and Mexico called the tariffs unfair and disruptive, with the European Commission preparing to target $84.1 billion worth of US goods for potential retaliatory tariffs if talks failed. To add to the uncertainty, President Trump publicly expressed a desire to fire Fed Chair Jerome Powell.
Meanwhile, geopolitical tensions escalated as Israel launched powerful airstrikes in Damascus, damaging the Defence Ministry and striking near the presidential palace. The attack increased geopolitical worries and further supported demand for gold. In Japan, the ruling coalition lost control of the upper house, weakening Prime Minister Ishiba’s authority as the US tariff deadline loomed.
These developments caused jitters in the markets and pushed safe-haven demand sharply higher. Both MCX Gold and Gold Spot surged, touching Rs 100,329 per 10 grams and $3,431 per ounce, respectively.
However, what goes up must come down. The final week of July brought an abrupt reversal. Both MCX Gold and Gold Spot fell sharply—by over 2%—after President Trump clarified that he was not planning to fire Powell, though he continued criticizing him for not cutting interest rates.
Further, Trump struck a trade deal with Japan to lower auto tariffs, marking the most significant agreement since the tariff announcements in April 2025. Similarly, the US reached a framework trade agreement with the European Union, imposing a 15% import tariff on most EU goods—thus averting a major trade war between the two global trading giants.
Toward month-end, the Federal Reserve kept interest rates unchanged and gave little guidance on potential cuts, reducing the appeal of the zero-yield asset.
Additionally, the US and Mexico agreed to extend their existing trade deal by 90 days to allow more time for negotiations toward a new agreement. This further dampened gold’s safe-haven demand.
In the near term, MCX Gold October Futures (CMP: Rs 98,700) is expected to decline towards Rs 96,500 per 10 grams.
(The author is DVP- Research, Non-Agri Commodities and Currencies, Angel One Ltd)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
