Gold prices edged lower on Monday after U.S. President Donald Trump signaled progress on trade deals and announced extensions on tariff deadlines, weakening demand for the safe-haven metal. Spot gold slipped 0.3% to $3,323.71 per ounce, in line with a decline in U.S. gold futures. Market sentiment was further influenced by Trump’s tariff revisions and shifting expectations around Federal Reserve policy, as inflation concerns reduce the likelihood of imminent rate cuts.
Gold prices fell on Monday as markets reacted to U.S. President Donald Trump’s announcement of progress on multiple trade agreements and an extension of tariff deadlines for several countries. The news dampened investor appetite for gold, which is traditionally considered a safe-haven asset during periods of geopolitical and economic uncertainty.
The spot price of gold dropped by nearly 0.7% to $3,335.20 per ounce during intraday trading. The decline comes after Trump stated on Sunday that the United States is on the verge of finalizing a number of trade agreements, and that countries impacted by earlier tariff threats would receive an extended reprieve. The announcement, seen as a sign of de-escalation in global trade tensions, led to a sell-off in gold and other precious metals.
President Trump initially proposed a 10% base tariff on most countries in April, with the possibility of additional duties reaching up to 50%. The original implementation date was set for July 9. However, in a significant policy shift, Trump postponed the tariffs for most countries—except those under the 10% base level—granting a three-week extension until July 30. Higher tariff rates are now expected to come into effect by August 1.
“This short-term reprieve is causing this intraday weakness in the gold price right now,” said Kelvin Wong, senior market analyst at OANDA. He noted that traders are recalibrating their positions in response to signs of temporary relief in global trade pressures.
Wong also highlighted that gold is likely to see “trophy price” movements around $3,320 with short-term resistance near $3,360. While prices may fluctuate within this range, the broader outlook remains uncertain due to mixed signals on monetary policy and inflation.
Another key factor weighing on gold prices is shifting expectations around U.S. monetary policy. Concerns that trade-driven inflation could rise have led market participants to believe that the Federal Reserve may slow down its pace of interest rate cuts.
Rate futures data indicate that traders no longer expect the Fed to cut rates this month and are now pricing in only two quarter-point reductions for the rest of 2025. This is a stark contrast to earlier projections, which had included up to four rate cuts by year-end.
Since gold is a non-yielding asset, its appeal diminishes when interest rates are expected to stay higher for longer. The pullback in gold prices rippled through the broader precious metals market. Spot silver fell 0.8% to $36.81 per ounce, while platinum slid 0.8% to $1,380.55. Palladium also weakened, dropping 1% to $1,123.31 per ounce.
In a separate development, President Trump last week signed into law a large tax and spending package expected to add more than $3 trillion to the national debt, which currently stands at $36.2 trillion. While the package aims to stimulate growth and provide relief in key sectors, fiscal hawks warn that mounting debt could have long-term repercussions on inflation and monetary policy.
The expansionary fiscal measures may further complicate the Federal Reserve’s approach to interest rates and inflation targeting. While such conditions would typically support gold as an inflation hedge, short-term sentiment has shifted toward optimism on trade and risk assets.
Looking ahead, gold prices are expected to remain volatile but range-bound in the near term. Market participants are closely watching developments in U.S. trade negotiations, the Federal Reserve’s policy trajectory, and economic data releases, all of which could influence gold’s direction.
“There’s still a lot of uncertainty out there,” Wong emphasized. “Gold isn’t out of the picture just yet. If trade talks fall through or inflation picks up faster than expected, we could see a sharp rebound.”
For now, however, optimism around trade and temporary tariff relief appears to have taken the shine off gold—at least temporarily.
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