Gold prices roared to life on Tuesday, climbing over 1% as investors flocked to the ultimate haven amid rising economic uncertainty.
According to CNBC, this surge was triggered by the U.S. Senate’s passage of a sweeping tax-cut and spending bill championed by President Donald Trump, compounded by looming trade tariff deadlines that could rattle global markets.
Spot gold jumped 1.1% to $3,337.42 per ounce, while U.S. gold futures settled 1.3% higher at $3,349.8 per ounce. Investors, wary of volatility, are betting on gold as a store of value during shaky times.
On Tuesday, the Republican-controlled Senate voted to approve Trump’s ambitious tax-cut and spending bill. This legislation, while promising economic stimulus, also includes cuts to several social service programs—a move likely to stir debate among those skeptical of government overreach.
Analysts see this bill as a double-edged sword for markets. As Marex analyst Edward Meir noted, “The budget bill that passed is providing support because it seems that it will contribute to a deficit of $3 trillion over the next 10 years.”
Meir added, “This is both to some extent inflationary, and more importantly, it will increase the debt burden that we have to service with more financing, more borrowing and all of these things are constructive for a stronger gold market.”
Adding fuel to the fire, U.S. Treasury Secretary Scott Bessent warned that countries could face significantly higher tariffs even with good-faith negotiations as a critical July 9 deadline looms. Tariff rates are set to revert from a temporary 10% to Trump’s suspended rates of 11% to 50% on that date.
This potential trade shock is pushing investors toward gold, a classic hedge against political and economic instability. For those of us who value free markets, such heavy-handed tariff policies risk distorting global trade and inflating costs.
Gold’s appeal is further enhanced by expectations of lower interest rates, which make non-yielding assets like gold more attractive. Markets are currently pricing in two rate cuts totaling 50 basis points this year, starting in September.
While gold shone, other precious metals had a mixed day. Spot silver edged up 0.1% to $36.11 per ounce, while palladium held steady at $1,097.16 per ounce. Platinum, however, took a hit, dropping 0.7% to $1,342.78 per ounce. These disparities highlight gold’s unique role as a crisis asset compared to its industrial-metal cousins.
Investors are also keeping a close eye on upcoming U.S. economic data for clues about the Federal Reserve’s next moves. The ADP employment report due Wednesday and payrolls data on Thursday could sway expectations for monetary policy.
Fed Chair Jerome Powell offered a measured take, stating, “Excluding the tariffs, inflation was behaving as expected and hoped.” Yet, uncertainty around tariffs and deficits keeps markets on edge.
For wealth-builders, gold’s rally is a reminder to diversify against government-driven distortions like ballooning deficits or trade wars. Consider allocating a portion of your portfolio to gold or gold ETFs as a hedge, especially with forecasts like Rhona O’Connell’s from StoneX, who predicts, “Gold is likely to average $3000/oz for the fourth quarter.”
Stay vigilant and frugal, as these turbulent times reward the prepared. Monitor Fed signals and tariff developments closely, and don’t let short-term noise derail your long-term wealth-building goals.