U.S. Trade Negotiations Driving Down Gold Prices
Gold Prices Soar in Q2 2025 Amid Economic Uncertainty
The second quarter of 2025 has witnessed a significant increase in gold prices, driven by a combination of economic factors and geopolitical tensions. The US Federal Reserve's decision on monetary policy and a news conference by Chair Jerome Powell today are highly anticipated, as they may further shape the gold market.
According to recent economic data, the US economy showed positivity, with the GDP growing at an annualized 3% for Q2 2025, rebounding from a contraction in Q1. Consumer spending also rose at an annualized 1.4% for Q2 2025. However, the Core Personal Consumption Expenditures price index increased by 2.5% for Q2 2025, indicating a rise in inflation.
These economic indicators, along with a weaker US dollar and ongoing geopolitical uncertainty, have supported strong investment demand and a 26% rise in gold prices in US dollar terms for the first half of 2025. Gold prices for August delivery decreased by $28.20 ($3,295.80 per troy ounce), but they remain significantly higher compared to previous quarters. In Q1 2025, the average US gold price was about $2,862.56 per ounce, representing approximately a 14.5% increase quarter-on-quarter.
Analysts suggest that these macroeconomic conditions influenced gold’s safe-haven appeal, alongside inflationary concerns and geopolitical tensions. The mid-year analysis forecasts a potential sideways to moderate upside movement (0-5% increase) in gold prices for the remainder of 2025 but leaves open scenarios where worsening stagflation or geopolitical crises could push prices even higher by 10-15%.
Forecasts for the rest of 2025 remain bullish, with some analysts from HSBC and others projecting average gold prices above $3,200 per ounce, and potential peaks near $3,600 per ounce by year-end. These expectations reflect continued economic uncertainty and safe-haven demand.
In other news, private businesses added 104,000 jobs in July, according to ADP employment data. The US "reciprocal tariffs" suspension period deadline is on August 3. China and the US have agreed to seek an extension from President Trump on their mutual trade truce time period, which expires on August 12. Canada, South Korea, and various other countries are in discussions with their US counterparts to secure deals.
The threat by Iran-backed Yemen's Houthi militia has caused cargo ships to circumvent the Red Sea, adding transportation and insurance costs. US President Donald Trump hinted at a potential 20% to 25% tariff (plus a penalty) on India. Year-on-year, pending home sales decreased by 2.80%, and month-on-month pending home sales fell by 0.8% from May. Silver prices for August delivery decreased by 53.50 cents ($37.566 per troy ounce).
In summary, Q2 2025 saw strong gold price appreciation supported by macroeconomic and geopolitical factors, continuing a trend from previous quarters, with analysts expecting prices to remain elevated or even rise further through late 2025. The US Federal Reserve's decision on monetary policy and the trajectory of gold prices could become more clear by next week.
Businesses added jobs in July, with private sector employing 104,000 new workers according to ADP employment data. Meanwhile, the finance sector is closely watching the US Federal Reserve's monetary policy decisions, as they may impact gold prices and the economy in the coming weeks.
