Gold pares gains after touching three-week highs

Gold prices trimmed early gains to trade flat around $3,360 an ounce on Monday, as investors weighed a mix of geopolitical uncertainty, shifting monetary policy expectations, and caution ahead of a busy week of economic data.

While gold initially benefited from safe-haven demand following another round of tariff announcements by the United States, gains were pared as broader market sentiment remained cautious and dollar strength offset risk-averse inflows.

Market attention was once again dominated by trade policy developments, as US President Donald Trump unveiled a new 30% tariff on goods imported from the European Union and Mexico, scheduled to take effect on August 1.

The announcement follows a sweeping set of tariffs introduced last week targeting more than 20 countries, including key US allies such as Japan, South Korea, Canada, and Brazil. Among the most notable measures is a 50% duty on copper imports, which has already had ripple effects across global commodity markets.

Although some market participants hold out hope that these tariffs could be softened or delayed through last-minute negotiations, the continued escalation in protectionist rhetoric is adding to global trade anxiety. This uncertainty has increased market volatility, with investors rotating cautiously between risk assets and safe havens like gold.

However, as the US dollar and Treasury yields remain elevated, gold’s upward potential has been constrained, with real yields still offering a relative return advantage over non-yielding bullion.

In the short term, gold traders are also positioning ahead of a busy week of US macroeconomic releases, which could significantly influence the Federal Reserve’s policy outlook. Key data points scheduled for release include the Consumer Price Index (CPI), Producer Price Index (PPI), industrial production figures, and retail sales data. These indicators are expected to provide critical insights into inflation trends, demand strength, and the overall health of the US economy.

A hotter-than-expected CPI or PPI reading could reaffirm concerns that inflation remains sticky, potentially leading the Fed to delay or scale back expected rate cuts. On the other hand, signs of slowing industrial output or weak consumer spending may strengthen the case for monetary easing later in the year. Either scenario has implications for gold, which tends to perform better when real yields decline and policy uncertainty rises.

Meanwhile, geopolitical factors continue to provide a supportive backdrop for precious metals. In addition to trade tensions, investors are keeping an eye on developments in the Middle East, US-China relations, and any policy shifts ahead of key elections in major economies. These factors contribute to a broader sense of macro risk, helping gold maintain its appeal as a portfolio hedge.

In summary, gold prices remain range-bound for now, caught between safe-haven demand driven by geopolitical uncertainty and headwinds from a firm dollar and rising yields. The direction in the coming days is likely to be shaped by how economic data influences Fed expectations, as well as the evolution of global trade dynamics.