Gold's Tug-of-War: Tariffs vs. the Dollar—Is This the Time to Buy?

The price of gold in July 2025 has become a barometer of clashing global forces: geopolitical trade tensions are driving demand for the metal as a safe haven, while a surging U.S. dollar and rising Treasury yields are weighing on its appeal. With gold hovering near $3,300 per ounce—down from recent highs—investors are asking whether this is a buying opportunity or a warning sign. The answer hinges on navigating two opposing currents: the geopolitical storm and the dollar's strength.

The Geopolitical Tailwind: Tariffs, Trade Wars, and Central Bank Buying

Gold's traditional role as a haven has never been more relevant. The U.S. tariff war, which expanded in late August 2025 to include 50% duties on copper imports and goods from Brazil, has intensified global trade uncertainties. These measures, alongside tariffs on South Korea and Japan, reflect a strategy of using trade as a lever in broader geopolitical rivalries.

Yet markets are showing tariff fatigue: traders have grown desensitized to the mere announcement of new levies. What remains potent, however, is the underlying risk of a broader decoupling of global supply chains. This uncertainty has fueled demand from central banks, which bought a record 244 tonnes of gold in Q1 2025. Poland's aggressive accumulation of 49 tonnes—nearly doubling its reserves—highlighted a shift toward “de-dollarization,” while China's quiet additions, despite domestic selling pressures, underscored strategic long-term bets.

The Dollar's Headwind: Strength and Yields Undermine Gold's Shine

The U.S. dollar, now trading at a 97.57 on the DXY index, has been gold's nemesis. A stronger greenback makes dollar-denominated assets like gold less attractive to international buyers. Compounding this pressure are rising Treasury yields: the 10-year note's climb to 4.40% has reduced gold's relative appeal, as it offers no yield.

The Federal Reserve's “wait-and-see” stance—keeping rates at 4.25%-4.50%—has amplified this dynamic. Markets now assign just a 24.8% probability of a rate cut by July, reflecting uncertainty over how tariffs will affect inflation. This cautious outlook has left gold in a technical limbo, with resistance at $3,325 and $3,360 and support near $3,272.

Technical Analysis: Consolidation Amid a Long-Term Uptrend

Despite short-term volatility, technical indicators suggest gold is in a holding pattern within a broader upward trajectory. The Elliott Wave analysis points to potential consolidation before a push toward $4,000 by 2026. Silver, though oversold (RSI at 24.8), faces headwinds from weak risk appetite and industrial demand concerns, even as solar and electronics sectors drive consumption toward 700 million ounces annually.

The Investment Dilemma: Buy Now or Wait?

The question is whether the current dip—a test of support near $3,300—presents a buying opportunity. Here's the calculus:

1. Short-Term Risks:
2. The dollar's strength and Treasury yields remain near multi-year highs.
3. Tariff fatigue may limit gold's upward momentum unless new geopolitical crises emerge.

4. Central bank buying, while robust, is offset by local selling in China and India.

5. Long-Term Bullish Drivers:

6. Geopolitical fragmentation is structural, not cyclical. Trade wars and de-dollarization are here to stay.
7. Central banks are diversifying reserves, and Poland's example could inspire others to follow.
8. The Fed's eventual pivot (if inflation cools) could weaken the dollar and reignite gold's appeal.

Recommendation: Position for the Long Game

Investors with a multi-year horizon should view dips below $3,300 as buying opportunities. Allocate a modest portion of a portfolio to gold—say 5%-10%—to hedge against systemic risks. Technical support at $3,272 offers a floor, while a breach of $3,360 could signal a resumption of the uptrend.

For traders, pair exposure to gold with short positions in the dollar or Treasury bonds. Alternatively, consider palladium, which surged 4% in July on supply deficits and regulatory shifts (e.g., China's VI emissions standards), though its industrial exposure poses risks.

Catalysts to Watch

• U.S. Inflation Data: A drop below 3% could force the Fed to signal easing, boosting gold.
• Fed Chair Powell's Speeches: Any hint of a rate cut or concern over trade-driven inflation would be bullish.
• Trade Deal Progress: A U.S.-EU agreement could ease tensions temporarily, but the broader geopolitical landscape remains volatile.

Conclusion: Gold's Time Will Come

Gold's current tug-of-war reflects a market stuck between immediate dollar pressures and long-term geopolitical realities. While short-term volatility may persist, the structural forces—central bank demand, de-dollarization, and trade uncertainty—are too powerful to ignore. For patient investors, the $3,300 level could mark the start of gold's next leg higher.

In the coming months, gold will likely test its technical resistance levels. But with the Fed's next move and global trade dynamics as pivotal catalysts, this is a metal to hold through the storm.