Gold prices traded in a tight range in Asian trade on Wednesday, holding around weekly highs as the United States dollar attempted a modest rebound amid renewed concerns over tariffs and uncertainty surrounding U.S. economic policy.
By 3:40 pm AEST (5:40 am GMT), spot gold was trading just 6 cents lower at US$3,338.60 per ounce.
The dollar snapped its overnight sell-off, buoyed by rising risk aversion linked to fresh trade tensions and President Donald Trump’s massive US$3.3 trillion spending bill, which has stoked fears about further U.S. debt accumulation.
Trump added fuel to the fire late Tuesday, warning that tariff rates on Japanese imports could hit 30–35% and affirming he is not thinking about extending the deadline date.
The dollar’s strength weighed on gold, capping its earlier upside. The greenback was also pressured by Trump’s latest attacks on Federal Reserve Chair Jerome Powell, raising questions about the Fed’s independence just as rate cut expectations continue to shift.
Although the Senate approved the spending bill, it now moves to the House for final approval, raising further fiscal uncertainty.
The prospect of a larger deficit has contributed to a cautious mood in markets, helping the dollar stabilise and pressuring gold.
Earlier Tuesday, the dollar had found brief support from robust U.S. data. Job openings surged by 374,000 to 7.769 million in May, beating expectations of 7.3 million.
The ISM Manufacturing PMI also improved to 49 in June, from 48.5 in May and above the consensus of 48.8, suggesting signs of stabilisation in the manufacturing sector.
However, that uptick in the dollar faded as traders turned their attention to comments from Powell at the European Central Bank (ECB) Forum in Sintra. “We're simply taking some time," Powell noted, adding, "As long as the U.S. economy is in solid shape, we think that the prudent thing to do is to wait and learn more and see what those effects might be."
According to the CME FedWatch Tool, markets now price in just a 21.2% chance of a rate cut in July, with the probability for a September cut easing slightly to 72.8% from 77% before Powell’s remarks.
All eyes now turn to the ADP private payrolls report due Wednesday, ahead of Thursday’s key nonfarm payrolls (NFP) release.
Economists expect ADP to show a gain of 95,000 jobs in June, following a disappointing 37,000 in May. Weaker-than-expected labour data could rekindle expectations for a July rate cut and increase the likelihood of more than three cuts this year.
However, the NFP data may ultimately prove decisive in reshaping the market’s outlook on the Fed’s path forward - and gold’s direction in the near term.
