Gold Prices Plunge 1% as Dollar Strengthens, Trump Announces Drug Tariffs

On the evening of July 28, the three major U.S. stock indices opened higher, while gold prices plummeted. The London gold price briefly fell below $3,300, marking the first time since July 17, with an intraday decline of over 1%.

This sudden drop in gold prices can be attributed to several factors. The U.S. dollar strengthened, making gold more expensive for holders of other currencies. Additionally, U.S. President Trump's announcement that he would soon declare drug tariffs added to the market's uncertainty, leading to a sell-off in gold.

Trump's comments on drug tariffs came as a surprise to many, as he had previously indicated that such a move might not happen until the end of the month. The announcement sent ripples through the market, with investors seeking safety in the U.S. dollar rather than gold.

The strengthening of the U.S. dollar also played a significant role in the gold price decline. A stronger dollar makes gold more expensive for foreign buyers, reducing demand and putting downward pressure on prices. This dynamic is a common occurrence in the gold market, as the metal is often used as a hedge against currency fluctuations.

Furthermore, the geopolitical tensions between the U.S. and Russia added to the market's volatility. Trump's expression of disappointment with Russian President Putin and his threat to impose "very severe" tariffs on Russia if a peace agreement with Ukraine is not reached within 50 days contributed to the overall market uncertainty. This geopolitical risk led investors to seek safer havens, further driving down gold prices.

In summary, the sudden drop in gold prices on July 28 can be attributed to a combination of factors, including a strengthening U.S. dollar, Trump's announcement of potential drug tariffs, and geopolitical tensions between the U.S. and Russia. These elements collectively created an environment of uncertainty, leading to a sell-off in gold and a decline in its price.