In the first half of 2025, international gold prices repeatedly hit new highs, driven by escalating global tariff risks and geopolitical tensions. At its peak, the price once surged past the $3,500/oz mark. As the second quarter began, the upward momentum significantly slowed, with prices currently fluctuating narrowly between $3,300 and $3,400/oz. The key factors fueling the price increase, such as geopolitical strife and uncertainty over the Federal Reserve’s policies, are losing their impact. Meanwhile, renewed turbulence in U.S. tariff negotiations and the latest CPI data, which is far from reassuring, have reignited market concerns about inflation.
Renewed U.S. Tariff Shock Elevates Global Trade Risks
The newest wave of U.S. tariff threats has injected even greater unpredictability into the markets, pushing gold prices higher, though whether prices can again break previous highs remains uncertain.
As noted, last week former President Trump signed an executive order extending the tariff “grace period” to August 1. At that point, goods from at least 14 countries will face hefty tariffs of 25% to 40%.
In the same week, Trump issued two consecutive tariff announcements: first, imposing high tariffs on imports from 14 countries, including Japan and South Korea; then, two days later, extending tariff measures to eight additional countries—Brunei, Algeria, Moldova, Iraq, the Philippines, Libya, and Brazil. Subsequently, new tariffs were also imposed: 35% on imports from Canada, and 30% on goods from both the EU and Mexico. These actions have sharply intensified global risk aversion.
This week, U.S. policy towards Russia escalated further. Trump threatened that unless Russia and Ukraine reach a peace agreement within 50 days, the U.S. would apply a 100% tariff on Russian imports and secondary tariffs on countries involved in Russian oil transactions, though specifics were not disclosed.
Trump also signaled plans to notify more than 150 countries of impending new tariffs, possibly at a rate of 10% or 15%. Notably, these tariffs presently affect mostly countries with smaller trade volumes, so the short-term shock to the global economy is limited. However, if tariffs are broadened to cover major economies, the resulting disruption could be far more profound.
U.S. June CPI Surprises to the Upside, Inflation Risks Emerging
As trade friction continues to escalate, the inflationary impact of tariffs on goods prices is now beginning to appear in the data. According to the U.S. Department of Labor’s June 15 release, the June CPI increased by 2.7% year-on-year, slightly above expectations (2.6%) and the previous figure (2.4%), and rose 0.3% month-on-month, higher than the previous 0.1%, marking the largest year-on-year increase since February. Core CPI was up 2.9% year-on-year, matching expectations and exceeding the prior value of 2.8%; month-on-month, it rose 0.2%, just below the anticipated 0.3%, but this marked the fifth straight month of undershooting market forecasts.
Although broadly in line with expectations, these inflation data suggest mounting upward pressure, which has pushed up U.S. Treasury yields and the dollar index. Following the data release, U.S. equity futures rose, Treasury yields fluctuated, and the dollar spiked in the short term.
Some analysts note that the latest CPI figures indicate the early signs of tariff-induced imported inflation. For example, Gregory Daco, Chief Economist at Ernst & Young-Parthenon, projects that if new tariffs are implemented on August 1, the average U.S. tariff rate could jump to 21%, posing “significant economic risks.”
However, the White House has denied any negative impact from the tariffs, and Federal Reserve Chair Jerome Powell remains cautious about rate cuts. Trump has continued to suppress talk of lowering rates via social media and has repeatedly criticized the Fed, but the central bank insists more data are needed to evaluate inflation—and that any policy adjustments will take time.
Gold Price Dynamics and Investment Advice
With inflation expectations rising and trade risks mounting, the market is highly focused on the future directions of the U.S. dollar, U.S. Treasury bonds, and gold prices.
According to Guangfa Futures, if the new tariffs take effect on August 1, they will add to inflationary pressure in the U.S., making it difficult for the Fed to roll out looser monetary policy ahead of schedule. However, the U.S. tax and fiscal stimulus legislation might support the economy, keeping dollar-denominated assets relatively resilient. Gold prices are likely to continue oscillating at elevated levels around $3,300/oz, pending further clarity from the Federal Reserve on monetary policy changes.
Amid the uncertainty in gold, investors may want to consider CME’s Micro Gold Futures (MGC) contracts. These contracts are one-tenth the size of standard gold futures, requiring significantly less capital and lower margin and transaction costs, while offering trading flexibility, safety, and risk-hedging on par with standard contracts. They are especially suitable for investors with limited budgets, neutral risk preferences, or daily hedging needs.
Conclusion and Outlook
Overall, the international gold market experienced sharp volatility in the first half of 2025 and is now trading within a high, narrow range.
Though some of the safe haven demand supporting gold has faded, the ongoing oscillations in U.S. tariff policy and marginally higher inflation data mean gold price volatility remains elevated in the short term. Key variables shaping the future trend of gold include signals from the Federal Reserve’s monetary policy, the scope of tariff enforcement, and progress in trade negotiations. Investors are advised to continue monitoring macro data and policy developments and to use flexible tools—such as micro gold futures—to manage position risk for a stable allocation of assets
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