Gold Prices Soaring Due to Tariff Tensions and Anticipated Interest Rate Reductions
The latest economic developments in the gold and platinum markets are causing a stir, with both metals showing signs of increased demand and tightening supply.
Last week, weaker-than-expected jobs data was released, with only 73,000 jobs added in July. Despite this, the US economy remains active, with ongoing talks with its top three trading partners - Canada, China, and Mexico.
In the world of precious metals, experts are predicting continued tightness in the platinum market. This is due to a pronounced supply crunch, fueled by years of underproduction, low inventories, and high borrowing/leasing costs. Both China and the US are aggressively buying platinum, further tightening supply.
China, in particular, added 1.2 million ounces of platinum in the second quarter, according to Standard Chartered. Meanwhile, London and Zurich are experiencing shortfalls of platinum. The platinum price began breaking out in mid-May and has surpassed $1,470 per ounce.
On the gold front, China's central bank has been steadily increasing its gold reserves for nine consecutive months, adding about 36 tons since November 2024. This sustained buying is part of China's strategy to diversify away from the US dollar and has been a significant driver of gold's 30% rally so far in 2025, keeping bullion prices elevated near record highs around $3,378/oz.
China's overall gold imports hit a new high in July 2025, with 101 metric tons imported, the largest monthly tally since April. This indicates strong underlying physical demand beyond central bank purchases.
The Fed published an article on gold revaluation this week, which, if signaling changes in reserve valuations or gold's monetary role, may enhance gold's strategic importance, potentially reinforcing its safe-haven demand.
In other news, First Quantum Minerals will receive a US$1 billion upfront cash payment from Royal Gold under a gold-streaming deal for its Kansanshi mine. While explicit details of this deal were not included in the search results, gold streaming agreements often increase liquidity for producers but can also highlight constraints, supporting price support indirectly.
The US Federal Reserve is expected to cut interest rates when it meets in September, which could further boost gold prices. The gold price edged higher this week, and there are hopes that the tariffs being imposed on certain countries will provide a boost for domestic businesses.
In conclusion, the current trends in the gold and platinum markets indicate strong demand and constrained supply, which should support elevated price levels and may increase volatility as market participants adjust to these structural shifts. China's persistent and large-scale gold purchases consolidate its role as a major physical buyer, supporting the gold price and reducing dollar dependence. The platinum market's structural deficits and acute supply tightness suggest a potential for price recovery, especially given the historic pattern of platinum rallying strongly when the US dollar weakens. The Fed's gold revaluation research, if signaling changes in reserve valuations or gold's monetary role, may enhance gold's strategic importance, potentially reinforcing its safe-haven demand. First Quantum’s streaming deal reflects financing approaches within the gold sector, consistent with a robust gold demand outlook and constrained new supply growth.
Technology plays a crucial role in the analysis of precious metals markets. Advanced data analytics and algorithmic trading based on machine learning are used to predict trends in gold and platinum prices, due to their increased role in understanding underlying factors such as demand, supply, and geopolitical events. Additionally, technology facilitates more efficient and secure mining operations, contributing to the growth and sustainability of the precious metals sector.
