Fed’s Caution Tempers Gold Investors’ Enthusiasm
Gold () declined by over 1% on Tuesday as a restrained dovish tone from the (Fed) tempered investor enthusiasm. Although concerns over trade tensions persist, the market is reassessing the near-term outlook for precious metals amid shifting monetary policy expectations.
U.S. President Donald Trump confirmed there would be no extensions to the 1 August deadline, escalating trade tensions. The new tariffs include 50% on imports, up to 200% on pharmaceuticals, and 10% on goods from BRICS nations. These measures are likely to heighten global trade clashes and could impact supply chains across multiple sectors.
At the same time, market expectations for a July rate cut by the Fed have decreased following a stronger-than-expected U.S. jobs report last week, which eased concerns about a significant economic slowdown. The labour market’s resilience suggests that the Fed may maintain a more cautious approach, reducing the likelihood of aggressive easing in the near term.
Gold stabilised around $3,300 during the Asian and early European trading sessions. Investors are now focused on June’s today at 6:00 p.m. UTC. The minutes could offer deeper insight into the central bank’s policy stance against a complex backdrop of inflationary pressures and trade policy uncertainty.
EU May Secure Exemptions from U.S. Trade Tariffs
The euro () rose by 0.14% on Tuesday as markets assessed the latest escalation in U.S. trade policy.
U.S. President Donald Trump confirmed that the newly announced tariffs on 14 countries would take effect as planned on 1 August. According to EU officials, the European Union appears to have secured exemptions from the baseline 10% tariff rate. This should provide some relief to transatlantic trade flows and help reduce immediate market volatility in the euro.
Further tightening the trade measures, Trump announced a 50% tariff on copper imports and signalled that additional sector-specific levies could be introduced. Particularly striking was his announcement of potential tariffs of up to 200% on pharmaceutical imports. However, these would be delayed by 12–18 months, giving the industry time to adjust supply chains and pricing strategies.
EUR/USD fell during today’s Asian and early European sessions. Investors are now focusing on June’s FOMC Meeting Minutes today at 6:00 p.m. UTC. The minutes could provide clearer signals on the Federal Reserve’s monetary policy trajectory, which will be crucial in shaping the U.S. dollar’s path. Key levels to watch for EUR/USD are support at 1.11690 and resistance at 1.17500.
RBA Interest Rate Decision Supports the Australian Dollar
The Australian dollar () gained 0.61% on Tuesday after the Reserve Bank of Australia (RBA) surprised markets by leaving unchanged at 3.85%. The decision diverged from expectations of a potential cut, highlighting the RBA’s cautious stance amid a complex global and domestic economic backdrop.
The RBA’s decision reflected its preference to wait for clearer signs of slowing inflation before adjusting policy further. RBA Governor Michele Bullock emphasised that inflation risks remain persistent, driven by high labour costs and weak productivity growth. These factors could keep inflation above current forecasts and require a longer period of restrictive policy. Adding to the cautious tone, RBA Deputy Governor Andrew Hauser highlighted that the central bank monitors the global environment, specifically citing heightened uncertainty linked to U.S. tariff developments. The bank’s attention to external risks underscores its sensitivity to global economic headwinds that could impact growth and trade dynamics.
In the latest trade developments, U.S. President Donald Trump ruled out extending tariff deadlines beyond 1 August. He also announced new duties: 50% on copper imports, a potential 200% on pharmaceuticals, and 10% on goods from BRICS countries. These actions are expected to heighten global trade tensions, potentially impacting commodity flows and global inflation, factors that the RBA and markets will continue to monitor closely.
The Australian dollar held steady around 0.65300 during the Asian and early European sessions. Market participants remain focused on today’s release of the FOMC Meeting Minutes at 6:00 p.m. UTC. The release could provide further insight into the Fed’s stance on monetary policy. Hawkish rhetoric will likely put bearish pressure on AUD/USD, while a dovish tone will support the current bullish trend.