The complicated combination of political and economic uncertainty that investors are dealing with is driving up gold prices once more and maintaining the metal’s allure as a safe-haven investment. As markets weighed persisting concerns about the US Federal Reserve’s policy outlook against optimism of a breakthrough in the war in Ukraine, spot prices on Tuesday rose above $3,330 per ounce and settled in a narrow range.
Following new tariffs imposed by US President Donald Trump that have affected international markets, the demonstration took place. Tariff receipts reached a record high of $27 billion in July alone, but researchers point out that these policies function as indirect taxes, driving up input costs for individuals and businesses, causing inflation, and lowering morale. Historically, gold has benefited greatly from these circumstances as investors have gravitated toward non-yielding assets like bullion due to inflationary pressures and decreasing faith in the dollar.
Supported by strong US economic data, the dollar has so far kept steady, but economists caution that this has not yet developed into a long-term upward trend. Gold is well-positioned to continue its defensive role if further indications of weakness appear in US labor or output data, as markets continue to be divided between stubborn inflation and slowing growth.
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