Gold Retreats From Highs, But Tariff Shock and Fed Uncertainty Keep Bulls in Control

Gold prices pulled back sharply from two week highs early Friday, snapping a strong upward move after briefly touching $3,410 an ounce. The retracement appears more a case of tactical profit taking than a shift in broader sentiment, as traders position ahead of next week’s pivotal US inflation data.

Despite the dip, gold remains poised for a second straight weekly gain, buoyed by a weaker dollar, rising rate cut bets, and intensifying geopolitical risks. The US Dollar Index is on pace for a weekly loss, weighed by mounting concerns over trade policy and the Fed’s future path.

Tariffs on Swiss Gold Bars Rattle Supply Chains, Add to Risk Premium

Market volatility intensified Thursday following reports that the US has quietly imposed new tariffs on one kilogram gold bar imports a direct hit to Swiss and London based refiners. As Switzerland handles the majority of the world’s bullion processing, the move could sharply disrupt global gold flows and inflate delivery premiums.

“This is no ordinary tariff it targets the physical backbone of the global gold market, that’s why gold spiked.”

The tariff shock came alongside broader retaliatory trade measures rolled out by President Donald Trump, with levies now targeting imports from Brazil, India, and Switzerland. Trump also floated additional duties on China and Japan, citing oil ties with Russia escalating tensions that could ripple across commodity markets.

Fed Path Clouded by Politics and Weak Data

The macro backdrop remains firmly in gold’s favor as traders grapple with a Fed increasingly seen as vulnerable to political pressure. President Trump’s nomination of Stephen Miran currently Chair of the Council of Economic Advisers to succeed Fed Governor Adriana Kugler (and potentially replace Jerome Powell in 2026) has further stoked fears of compromised central bank independence.

At the same time, the economic data continues to deteriorate, feeding speculation that the Fed may be forced into a 100 basis point easing cycle between late 2025 and early 2026.

“We’re pricing in at least four cuts by Q2 next year. The dollar is softening accordingly and that’s gold’s cue.”

Outlook: Short-Term Pullback, Long Term Ascent

While the near term pullback could deepen, with technical support near the $3,350 zone, traders appear ready to re-enter on dips, especially if next week’s US CPI print confirms the disinflationary trend. With geopolitical flare ups and Fed credibility under scrutiny, gold remains structurally bid.

SARACEN MARKETS VIEW:
Gold’s recent correction is tactical, not structural. Expect renewed upside on softer inflation data or further trade escalation. Watch $3,350 as a key pivot below it, dip buying likely intensifies.

Disclaimer: This report is for informational purposes only. It does not constitute investment advice or represent the official views of any central bank or regulatory body.