When uncertainty strikes, the market turns to the shiny yellow metal.
As of July 15, Gold was trading around $3,362, up 0.6% for the day. The slightly softer U.S. Dollar Index gave Gold a small lift.
It began with President Donald Trump's 10% baseline tariff announcements about three months ago. Following the initiation, there have been many changes to the tariff rates. The most recent being a fresh warning shot fired on July 13, 2025, when Trump announced 30% tariffs on imports from the European Union and Mexico, effective August 1.
Following the announcement, formal letters were issued to the European Commission President, Ursula von der Leyen, and the Mexican President, Claudia Sheinbaum. The tone was clear – play by Washington's rules or pay up. Subsequently, Gold quickly leaped to nearly $3,350/ounce as nerves spread across markets.
However, this threat wasn't an isolated one. The next day, reports revealed that 23 countries had received similar letters from the White House. Brazil faced a brutal 50% rate. In his Truth Social post, Trump further warned the EU that any counter-tariff would be matched or exceeded, threatening them against retaliation. Such an open threat to adjust tariffs based on political loyalty angers the investors.
On July 15, tensions reached a new high. The threats from the U.S. President aimed at Russia took another drastic turn, with 100% tariffs imposed on Russian goods unless Moscow ends the war in Ukraine within 50 days. These bold political statements through trade policy add to the economic pressure, leaving the investors completely stunned at such unpredictability. And when unpredictability rises, Gold often gets the call.
As a result, the market leans towards Gold, and the metal's price hovered between $3,340/ounce and $3,370/ounce. This drift signals a struggle to push above key resistance levels while staying firmly supported by a nervous market. Even as the U.S. dollar rebounded after the slightly above the anticipated Consumer Price Index (CPI) report, Gold did not retreat far, thus indicating a strong sentiment towards the metal.
The tariff tensions do not end here, as they cause a crack in the relationship between the U.S. President and the Federal Reserve. Trump criticized the Fed Chair Jerome Powell and demanded rate cuts that would bring interest rates below 1%. The Fed has so far held steady between 4.25% and 4.50%, leading the markets to begin pricing in two cuts before the year ends quickly. Rate cut expectations usually translate to a weaker dollar and lower yields, which become music to gold investors' ears.
The risk-off attitude is not just prevalent among individual investors, but the central banks are also accumulating Gold, signalling a long-term reallocation towards foreign currency. While the U.S. gold reserves have remained constant at approximately 8,133.5 tonnes since Q1 2006, signalling their intention not to use Gold as a trading instrument, countries like China have been using Gold as a part of their "stealth de-dollarization strategy".
In 2025, the gold accumulation by central banks is mainly driven by monetary independence (Poland) and currency stabilization (Turkey). However, the de-dollarization strategy is also a key factor behind gold accumulation in China and Turkey, as many countries have long indicated their desire to reduce reliance on the U.S. dollar. Additionally, tariff tensions are accelerating this process, with Gold as a primary alternative to counter currency weaponization and financial system bifurcation.
A horizontal bar chart showing the Top 10 Central Bank Gold Accumulation in 2025`
Source: gold.org
The Geopolitical Risk (GPR) Index, developed by Dario Caldara and Matteo Iacoviello, is a reliable measure of geopolitical events. The index measures the percentage of mentions of geopolitical uncertainty in newspapers and is widely used by policymakers. There is also a strong association between gold prices and the geopolitical risk index, as investors consider Gold a safe haven. The price of Gold tends to rise whenever geopolitical risk increases. The chart below shows a spike in 2025, reflecting global shocks where the U.S. is at the center of political, military, or economic uncertainty, directly relevant to gold demand.
Comparison of Geopolitical Risk Index (GPR) between the United States and Russia from 1985 to 2025.
Source: www.matteoiacoviello.com
Gold is slowly regaining its glitter amid tariff tensions and trade wars and establishing itself as an anchor of credibility. In the last week, Gold has yet again proven its status as a haven for investors amid geopolitical drama, tariff battles, and economic uncertainties. At this point, analysts voiced their opinions and pointed out our three pillars supporting gold price growth: fear of tariffs among investors, speculations on the Fed rate, and global economic uncertainty. If that trifecta holds, Gold will continue to bloom.
