By Samer Hasn, Senior Market Analyst at XS.com
August 7, 2025:
Gold prices are retreating in early morning trading today, failing to hold above the $3,370 per ounce mark after four consecutive sessions of gains.
The decline comes amid a rebound in U.S. Treasury yields, which had touched their lowest levels since April yesterday on rising hopes that the Federal Reserve will implement multiple interest rate cuts this year.
Nevertheless, the surrounding risk factors suggest this pullback could be a corrective wave ahead of a potential continuation in gold’s upward trend.
On the trade front, developments are now aligning this theme with the Russia-Ukraine conflict under a similar geopolitical trajectory. President Donald Trump has threatened to impose steep tariffs on India over its imports of Russian oil, with a decision expected today. However, experts believe Trump’s threat is more of a bargaining chip aimed at securing a deal that opens Indian markets to U.S. products and reduces India’s reliance on Russia, according to the Wall Street Journal.
Additionally, Trump has threatened to impose direct or secondary sanctions on Russia and its trading partners unless a ceasefire is reached by Friday. Trump’s special envoy, Steve Witkoff, is set to visit Russia today to engage with its leadership, as reported by Reuters.
Perhaps more importantly for markets, the suspension of tariffs on China is also nearing expiration in the coming days, with no agreement reached thus far.
As a result, the coming hours and days may play a key role in shaping market dynamics. Should negotiations with China and India falter, and no ceasefire in Ukraine materialize, geopolitical tensions could escalate beyond tariff threats alone. Such an outcome could renew the risk premium on safe-haven assets and most notably gold.
In the short term, the U.S. economy appears resilient at first glance, particularly with the latest GDP figures showing an unexpectedly strong acceleration. However, even conservative platforms are increasingly voicing concern about long-term consequences and the false sense of optimism some economic figures may convey. Lingering concerns among investors are likely to continue supporting gold as a long-term safe-haven asset and sustain its broader upward momentum.
Wall Street Journal’s deputy editorial features editor Matthew Hennessey highlighted that the hidden cost of Trump’s tariffs lies in the economic activity that has not and will not occur because of protectionist policies, such as investments that were never made and jobs that were never created amid heightened market uncertainty. While GDP may be growing, this metric does not reflect what’s been lost in the shadows if from of delayed expansion decisions and restrained consumer spending. Hennessey cited economist Frédéric Bastiat, who argued that the bad economist sees only the immediate effect, while the good one considers the longer-term consequences. He quoted Bastiat also saying: “It almost always happens that when the immediate consequence is favorable the later consequences are disastrous.”
The Journal’s Editorial Board has also criticized tariffs and warned of their long-term effects on investor and consumer confidence and overall growth. It noted that the recent GDP growth was largely due to declining imports, while private domestic investment actually contracted.
However, the erosion of confidence in the U.S. and its economy may not stem solely from tariff policy. It could also reflect heightened risks tied to Trump’s expanding intervention in vital institutions. His recent dismissal of the head of the Bureau of Labor Statistics last week raised concerns of a different nature.
The New York Times Editorial Board said in a opinion piece that this move poses serious threats to the integrity of government institutions and their ability to make data-driven decisions. It undermines confidence in the credibility of official statistics, intimidates public employees who may hesitate to speak truthfully for fear of retaliation, and weakens the public’s and businesses’ willingness to cooperate in data collection. Perhaps most concerning is the door this opens to an alternative reality shaped by political power rather than facts. The Board cited historical examples from Argentina and Greece, where manipulated economic data misled the public and investors until trust collapsed and crises escalated.