Gold remains attractive

1 Temmuz 2025

Written by Linh Tran, Market Analyst at XS.com

Gold has staged a strong rebound from the $3,245/oz low recorded in the second half of June and has now reclaimed the $3,300/oz level, reflecting the return of defensive capital flows amid a global market increasingly sensitive to macroeconomic and geopolitical developments.

The main reason behind gold’s correction during mid to late June was largely the temporary easing of geopolitical tensions—particularly the positive diplomatic momentum among parties involved in the Middle East conflict—as well as a short-term rotation by investors into higher-risk assets. In addition, the market had largely priced in short-term expectations regarding the Federal Reserve’s monetary policy, contributing to a pause in gold’s upward momentum.

However, moving into July, the market faces several factors that could reshape the trajectory of gold prices. Chief among them is the expiration of the 90-day tariff suspension by the United States on Chinese imports—set to end around July 8 or 9. Should tariffs be reinstated, especially on technology products and manufacturing components from China, it would significantly escalate global trade tensions, weigh on economic growth, and spur demand for safe-haven assets—creating a supportive backdrop for gold.

Conversely, in a more optimistic scenario where both sides reach a new tariff suspension agreement or negotiations show tangible progress, gold may face short-term technical pressure, though medium-term risks would likely persist.

In addition to trade-related risks, this week will also bring a series of key U.S. economic data releases, including the ISM manufacturing and services PMIs, the ADP employment report, average hourly earnings, the unemployment rate, and non-farm payrolls (NFP). These indicators will provide a comprehensive snapshot of the U.S. economy’s health and will be instrumental in shaping interest rate expectations. If the data continue to reflect labor market softness and slowing growth, expectations of rate cuts will rise—providing further support for gold. On the other hand, stronger-than-expected data could drive bond yields and the U.S. dollar higher, creating headwinds for the precious metal.

Amid a complex backdrop of policy risk, geopolitical uncertainty, and macroeconomic volatility, gold is well-positioned to extend its short-term recovery. Moreover, if these risk factors continue to build, the metal may have further upside potential toward revisiting historical highs.

 

Zaid Barem / ymm