Gold Stuck in Summer Flat

Gold prices declined by 0.52% to $3,338 per troy ounce this week, remaining trapped in an increasingly narrow sideways range centred around $3,330–$3,350. Fluctuations have become so minor that they appear almost irrelevant, with the precious metal firmly locked in a dull summer consolidation phase. Even major geopolitical and macroeconomic developments have failed to generate sustained momentum. Earlier in July, U.S. President Donald Trump extended a global tariff deadline to August 1, initially sending gold tumbling by 1.55% to $3,283 per ounce, a move that brought it dangerously close to key support at $3,230–$3,250. However, that level held firm, halting any deeper slide toward $3,000.

Shortly thereafter, Trump reignited market anxiety with new threats. Brazil faced 50% tariffs over its judicial proceedings against former President Jair Bolsonaro, while Canada was hit with 35% tariffs for non-cooperation. Trump also proposed 50% levies on copper imports. These threats reversed gold’s decline, lifting it 0.92% to $3,363 last Friday. Over the weekend, tensions escalated further as Trump included the EU and Mexico among his tariff targets, promising 35% duties unless trade deals are reached by August 1. Gold responded by opening 0.64% higher on Monday at $3,375. Both the EU and Mexico expressed willingness to negotiate, calming markets and shifting attention back to U.S. economic data.

June U.S. inflation report came in hotter than expected, with CPI rising to 2.7% YoY from 2.6%, eroding hopes for a July interest rates cut. Federal Reserve (Fed) Chair Jerome Powell’s earlier warnings about the inflationary impact of tariffs appeared to be validated, and gold resumed its downward trajectory. Unwilling to accept this trend, Trump, having already pushed a tax cut bill through Congress, turned up pressure on the Fed. Republican congresswoman Anna Paulina Luna announced that Powell is being removed, and several lawmakers reportedly backed the move. The U.S. Dollar plunged and gold surged 1.52% to $3,374 per ounce, as markets reacted to what they saw as a threat to central bank independence. The S&P 500 reversed sharply lower, reflecting investor concern about U.S. asset stability. However, Trump soon walked back the threat, denying plans to oust Powell just hours after the reports surfaced. Markets calmed, equities rallied, and gold prices returned to their familiar $3,330–$3,350 band.

Institutional investors continue to favour a wait-and-see approach. The SPDR Gold Trust (GLD) ETF attracted $29.9 million in inflows last week, reflecting one of the most neutral positions in recent months. These large players appear reluctant to take bold positions, reinforcing the notion that the current consolidation could stretch into mid-August. Technically, unless a significant breakout occurs, the prevailing indecision is likely to persist.