Gold prices held steady in a tight range on Tuesday, with spot gold closing marginally lower at $3,342.80 per ounce after U.S. July CPI data met expectations. Despite the muted reaction, analysts maintain that aggressive Federal Reserve rate cut expectations will drive prices toward a retest of the 2025 record high at $3,500.
The U.S. Bureau of Labor Statistics reported headline CPI rose 2.7% YoY (vs. 2.8% expected), while core CPI climbed 3.1% (vs. 3.0% forecast). The figures kept COMEX December gold futures subdued at $3,399.20 (-$5.90), though September silver gained 0.6% to $38.01. The trading range for spot gold narrowed to $3,331-$3,357 as markets had largely priced in a 25-basis-point September Fed cut (90% probability per CME FedWatch Tool).
Monetary Policy Shift
ING’s Commodities Strategist Ewa Manthey upgraded her gold forecasts, citing fading labor momentum and sticky inflation: “With three 2025 H2 cuts and two early-2026 cuts now projected – more aggressive than market pricing – we expect gold to surpass $3,500 by year-end.” ING raised its Q3 average forecast to $3,400 (from $3,200) and 2026 outlook to $3,512 (+11%).
Political Uncertainty
The resignation of Fed Governor Adriana Kugler and her replacement by Trump-appointed Stephen Miran fueled concerns over central bank independence. Manthey noted: “This echoes 2018 trade war dynamics, where political risks amplified gold’s haven appeal.”
Structural Demand
Goldman Sachs’ Alexandra Wilson-Elizondo highlighted dual support: “Central bank buying persists amid USD diversification, while gold ETF inflows are growing at their fastest pace since 2020.” Bloomberg reported Asian ultra-high-net-worth investors doubled gold allocations, with Hong Kong families engaging in physical bullion arbitrage.
Monday’s 2% drop reversed after the Trump administration exempted gold from proposed tariffs, averting a potential 39% levy that had threatened Swiss refinery flows. “The tariff reprieve removed a systemic risk premium,” said independent analyst Ross Norman.
Renaissance Macro’s Neil Dutta stated: “July CPI confirms slowing growth, cementing a September cut as the catalyst for $3,600+.” ING added that a surprise 50-bp cut could trigger a 5% single-day rally.
