Gold jumps $42 as US tax bill passes, dollar declines globally
What’s happening:
Gold prices settled higher on Tuesday following the clearance of the US tax-cut bill.
What happened:
The Republican-controlled Senate on Tuesday passed US President Donald Trump’s tax and spending bill.
The latest economic reports and tariff related news from the US also supported gold prices.
Gold prices rise by more than 1% as safe-haven assets flock to the market
Why it matters:
The policy, dubbed as “One Big Beautiful Bill,” includes huge tax cuts, new tax breaks, the rolling back of billions of dollars in green energy incentives, reductions to Medicaid and more stringent immigration enforcement.
The bill was passed by the narrowest margin, with the Senate voting 51-50 in favour. Concern around the bill crushing the green industry, hurting vulnerable people, and massively increasing US deficit had investors fleeing to gold.
Investors continued monitoring the latest trade developments between the US and some of its biggest partners ahead of the expiration of President Donald Trump’s 90-day respite on reciprocal tariffs.
US Treasury Secretary Scott Bessent warned that higher tariffs could be imposed on some nations despite ongoing talks, following the July 9 deadline, fuelling investor fear and lending support to the safe-haven gold.
Gold prices continue to rise globally after the approval of Trump's tax bill
US Federal Reserve Chairman Jerome Powell maintained a cautious tone on interest rate cuts, signalling inflation risks due to recent tariffs. Investors currently expect two rate cuts this year, beginning in September. Speculations of lower interest rates increase the appeal for non-yielding gold.
Data released on Tuesday from the US showed the Dallas Fed’s general business activity index rose by 5.7 points in June, but remained in the negative, at a reading of –4.4.
Although the ISM manufacturing PMI rose to 49 in June, from 48.5 in the previous month, it marked the fourth consecutive month of contraction in the manufacturing sector.
US gold futures gained 1.3% to close at $3,349.8 an ounce on Tuesday.
In other metals trading, silver settled higher at $36.397 an ounce, copper rose to $5.0995, platinum closed at $1,358.7 and palladium settled at $1,112.90.
Gold prices are rising
What to watch:
Investors will continue monitoring the implementation of the US tax and spending bill. Markets will also monitor trade talks and the geopolitical environment.