Gold prices are under pressure amid hopes for potential trade deals that could reduce demand for the safe-haven metal.

So far in 2025, gold has rallied over 25% driven by rising fears about the United States fiscal deficit and dangers posed by ongoing trade tensions.

While the trade war between the United States and other nations seems to be center stage, several other factors will also continue to influence gold prices in the future.

Trump threatened tariffs on 14 countries but signed an executive order delaying implementation and extending ‘reciprocal’ tariffs from July 9 to August 1, giving countries four more weeks to reach an agreement.

“Trump’s looming August 1 tariff deadline, delayed from July 9, is fueling uncertainty, strengthening the dollar as a safe haven and capping gold’s upside”, says Aaron Hill, Chief Analyst at FP Markets.

Gold price has remained subdued as the dollar index has strengthened or at least stood its ground. Currently, the US dollar index is around 97.5, down by 7.5% over the last year.

Investors are turning to the US dollar as a safe haven currency amid economic uncertainty. As the dollar strengthens, gold prices fall. Any weakness in the US dollar will boost gold prices.

The recent US jobs report has tempered concerns about a slowing economy and reduced expectations for a Federal Reserve rate cut in July. The gold price will remain under pressure as interest rates and gold prices are inversely related.

Meanwhile, central banks are hoarding gold like never before. “Central banks’ 20-tonne gold reserve increase in May signals long-term bullishness, but ETF outflows (-19t) highlight short-term caution, keeping prices volatile,” says Aaron.

43% of central banks believe that their own gold reserves will increase over the next 12 months.

Here’s why central banks have turned into big buyers of gold. “During times of economic uncertainty and fluctuating inflation rates, gold can act as a hedge against inflation. While different currencies may lose purchasing power, gold usually maintains or improves its value, which helps to protect a country’s wealth. Therefore, central banks are increasingly viewing gold as a tool to help preserve their national wealth amid global economic uncertainty,” says Rick Kanda, Managing Director at The Gold Bullion Company.

Overall, the markets are influenced by political and trade developments, leading to investors hedging into safe-haven commodities like gold during uncertain times.

“In ongoing geopolitical uncertainty, a prized commodity for saving wealth would still be gold, and any further uptick in trade tensions or risk in politics can send prices into a bullish trend. Such a situation justifies the time-tried place of gold as the best commodity for saving wealth during uncertain market times,” says Aaron.

Gold in the international market has been trading in a close range for over two months now. “Gold prices are currently trapped around the $3270 to $3420 region as the current consolidation pattern continues into the twelfth week,” says Dr. Renisha Chainani, Head – Research at Augmont. Gold price in India is also steady at around Rs 97,000 per ten gram during this period.