Gold prices held firm during Wednesday’s Asian session, sustaining gains from the past two days. The metal found support as worries about the growing U.S. fiscal deficit intensified following the Senate’s approval of President Donald Trump’s expansive tax and spending legislation.
Ongoing uncertainty around looming U.S. trade talks, especially with the July 9 tariff deadline fast approaching, has also reinforced gold’s role as a refuge for cautious investors.
Spot gold traded near $3,337.25 per ounce, while August gold futures dipped marginally by 0.1% to $3,347.40 per ounce as of 01:52 ET.
This week, gold has climbed more than 2%, bouncing back from last week’s dip after news of a ceasefire between Israel and Iran eased demand for safe-haven assets.
Senate Passes Trump’s Tax and Spending Package, Raising Debt Alarms
The Senate, controlled by Republicans, narrowly approved a major tax and spending bill on Tuesday. The legislation aims to slash taxes, cut social welfare programs, and boost funding for defense and border security. It is expected to increase the U.S. national debt by roughly $3.3 trillion.
The bill now moves to the House of Representatives, with the aim of securing President Trump’s signature before the July 4 holiday.
Meanwhile, Federal Reserve Chair Jerome Powell stressed on Tuesday that the central bank will carefully assess tariff impacts before considering interest rate cuts, signaling a cautious stance in response to Trump’s calls for aggressive monetary easing.
Powell’s comments were seen as moderately dovish, as he left open the possibility of a rate reduction as soon as next month.
All eyes are now on Thursday’s U.S. nonfarm payroll report, which will be pivotal in determining the likelihood of a July rate cut, though many expect easing measures to come by September.
Trade Deadlines and Fiscal Deficit Concerns Bolster Gold Demand
The combination of fiscal deficit fears and expectations of looser monetary policy has strengthened gold prices. The upcoming tariff decision deadline on July 9 has added another layer of market caution, further boosting demand for precious metals.
President Trump has indicated no plans to extend the tariff reprieve, intending instead to notify countries individually about the tariffs they will face.
He also suggested that India may ease restrictions on U.S. companies, possibly opening the door for a trade deal, while expressing doubts over reaching a similar agreement with Japan.
Mixed Movements in Metals Amid Dollar Weakness
The U.S. Dollar Index remained subdued during Asian hours, hovering near its lowest level since February 2022.
Despite this dollar softness, metals markets showed limited movement as traders awaited clarity on trade talks and tariff updates.
Silver futures steadied around $36.05 per ounce, while platinum futures inched up 0.2% to $1,369.05.
Copper futures were livelier: London Metal Exchange copper rose 0.4% to $9,968.65 per ton, and U.S. copper futures gained 1.6%, closing at $5.1165 per pound.