If you’re watching the gold market, things just got a little more interesting.
On Wednesday, July 23rd, gold prices took a slight dip as global investors grew more optimistic following a fresh trade deal between the U.S. and Japan.
But while the glimmer of reduced trade tensions might have dulled the appeal of gold slightly, a weaker U.S. dollar and declining Treasury yields are helping cushion the fall, and even keeping hopes alive for a return to the $3,500 mark.
Gold’s minor pullback, 0.2% to be exact, with spot prices hovering around $3,425.91 per ounce, comes after U.S. President Donald Trump announced a trade agreement with Japan. This deal, which includes a 15% tariff on U.S. imports from Japan, boosted risk appetite across markets and sent Asian shares rallying.
Risk-on moods tend to weigh on safe-haven assets like gold. Investors usually turn to gold when uncertainty is high, think geopolitical tensions, inflation spikes, or trade wars. But when trade relations improve and equities start to rise, demand for gold can ease a bit, just like we’re seeing now.
Some analysts think we may see gold reach $3,500 again. According to Tim Waterer, Chief Market Analyst at CM Trade, “If further trade deals are signed ahead of August 1, this could further boost general risk appetite and reduce the demand for gold. But if the USD remains pressured, this will keep a return to $3,500 a viable near-term prospect.”
This simply means we should watch the dollar. If it stays weak, gold could easily rebound, despite any boost in equity markets or trade optimism.
As if that weren’t enough to stir the pot, Trump is once again taking jabs at the Federal Reserve. He recently called Fed Chair Jerome Powell a “numbskull,” criticizing him for keeping interest rates too high and suggesting he’ll be out in eight months.
This political pressure on the Fed introduces even more volatility and could influence future interest rate decisions, a key factor in gold pricing. If rate cuts become more likely, that’s another tailwind for gold.
While gold is grabbing headlines, other precious metals are making quiet moves. Spot silver rose 0.2% to $39.34 per ounce, platinum gained to $1,445.20, and palladium climbed 0.4% to $1,280.01.
Each of these metals benefits from the same macro mix: a soft dollar, inflation uncertainty, and global industrial demand.
This is probably not a bad time to invest in gold. But, of course, we have to be cautious.
If you’re looking for a long-term hedge or short-term upside, gold still offers solid potential. The U.S.-Japan trade deal may calm some nerves, but between a weak dollar, political pressure on the Fed, and economic uncertainties, the case for gold remains strong.
Keep an eye on the dollar, Treasury yields, and any surprises from the Fed. But don’t be surprised if we see another push toward $3,500 soon.
