Gold markets brace for volatility this week after Swiss tariff concerns triggered wild swings in physical premiums.
Traders now eye Trump’s trade policy signals alongside critical US inflation and spending data for direction. The tug-of-war between safe-haven demand and shifting Fed expectations leaves bullion searching for clear momentum.
Last week’s drama centered on US tariffs targeting Swiss gold bars – the backbone of COMEX deliverable supply. With Swiss refiners producing over 70% of global standard bars, the threatened 39% levy sparked panic.
Bullion banks scrambled to redirect physical gold to New York, draining London vaults and sending the COMEX-LBMA premium soaring to $95/oz on August 8. This liquidity squeeze briefly propelled spot gold above $2,400 before the White House temporarily exempted gold imports, easing immediate pressure.
Beyond tariffs, gold found support in softening US data and a dovish Fed pivot. July’s ISM services index hit an 8-month low while jobless claims rose, amplifying labor market concerns.
Hawkish Fed officials unexpectedly shifted tone, with Mary Daly suggesting “the time for cuts is near.” Markets now price a 90% chance of a September cut. Trump’s Fed Board nomination of dovish economist Miran further cemented expectations, though it raised eyebrows about central bank independence.
This week’s US CPI and retail sales could validate or challenge the rate-cut narrative. Forecasts show headline inflation inching up to 2.8% year-on-year while July retail sales may contract 0.1%-0.5% monthly. Stronger numbers might pressure gold, though traders see September payrolls as the true litmus test for Fed action.
Meanwhile, all eyes await Trump’s confirmation on Swiss tariff exemptions and whether he extends the US-China tariff truce. If policy clarity emerges, gold’s tariff-driven premium could unwind – but any hesitation may reignite safe-haven bids.
For now, the metal treads cautiously between $2,370 support and $2,430 resistance, its fate tied to Washington’s next moves.
