Gold surges as U.S.-India trade rift deepens

August 7,2025 (MLN): Spot gold was up 0.46% at $3,395.32 an ounce as of [12:55 pm] PST on Thursday, according to data reported by Mettis Global.

Gold prices climbed as investors sought refuge in safe-haven assets amid escalating trade tensions between the United States and India.

Gold futures gained 0.3% to $3,443.30.

The move came after President Donald Trump declared a new 25% tariff on Indian imports, citing New Delhi’s continued purchases of Russian oil.

The decision, which follows a breakdown in trade negotiations, threatens to raise duties on some Indian goods to as much as 50% among the highest levied on any U.S. trading partner. The tariff will take effect 21 days after August 7 according to CNBC.

“Trump has been dishing up fresh tariff threats, which is keeping gold in the frame as a defensive play for investors,” said Tim Waterer, chief market analyst at KCM Trade to CNBC.

“Gold is moving towards the doorstep of the psychological $3400, with risk-assets being kept off-balance somewhat by the constant tariff proclamations by the U.S. President.”

A weaker U.S. dollar also contributed to gold’s gains.

The dollar index remained near a one-week low following weaker-than-expected U.S. jobs data last week, which prompted market speculation about potential interest rate cuts.

Traders are now pricing in a 94% chance of a 25-basis-point rate cut by the Federal Reserve in September, according to the CME FedWatch Tool.

Minneapolis Fed President Neel Kashkari suggested that the central bank may need to cut rates soon to address signs of economic slowdown, although the impact of tariffs on inflation remains uncertain.

Gold, seen as a hedge during times of economic and political uncertainty, typically benefits from lower interest rates as they reduce the opportunity cost of holding the non-yielding metal.

In the broader precious metals market, silver rose 0.3% to $37.98 per ounce.

However, platinum fell 0.7% to $1,324.26, while palladium declined 0.8% to $1,141.56.

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