Trump’s Tariff Threats and Geopolitical Risks Support Bullion

Market sentiment shifted after former President Donald Trump announced plans to impose unilateral tariffs and notify global trade partners within two weeks. This renewed policy risk undermined recent optimism following productive U.S.-China trade talks.

Simultaneously, geopolitical tensions escalated. The U.S. allowed voluntary evacuation of military families from the Middle East and scaled back diplomatic staffing in Baghdad amid rising regional threats.

Iran’s defense ministry issued retaliatory warnings, while Russia intensified drone strikes on Ukraine, particularly targeting Kharkiv. These events have contributed to the demand for defensive assets, such as gold.

Weak U.S. CPI Strengthens Fed Rate Cut Expectations

Gold also drew support from May’s softer-than-expected Consumer Price Index data. Headline CPI rose 2.4% year-over-year, slightly below the 2.5% forecast, while core CPI held at 2.8%. This reinforced market expectations that the Federal Reserve may initiate rate cuts by September.

Treasury yields dipped in response, dragging the U.S. Dollar to a one-month low and improving the appeal of non-yielding assets, such as gold. Futures pricing via the CME FedWatch Tool now indicates a 70% probability of a September rate cut.

Outlook: Gold Bullish Ahead of PPI and Jobs Data

Investors now turn to Thursday’s U.S. Producer Price Index (PPI) and initial jobless claims for further clarity on the Fed’s rate path.