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Meanwhile, price pressures increased to their highest level since October 2022 (69.9 vs 67.5), with many survey participants highlighting the impact of tariffs, especially on commodities.Gold prices had already been on a recovery from a daily low around $3349 before the data further boosted the recovery.

Gold Prices Moving Forward – Federal Reserve Policy & Rate Cut Expectations

Golds looked on course for a potential correction last week before the US jobs data. The picture since then has changed dramatically however, and this underscores the age old adage, ‘trade what you see, not what you think’.The most significant change has come in the form of rate cut expectations from the US Federal Reserve. Ahead of the jobs data on Friday last week, markets were still split around the 50-50 mark on a potential rate cut in September following the Fed meeting on Wednesday.However, as of this morning the CME FedWatch Tool reflected a high 88% probability of such a cut at the upcoming monetary policy meeting in September.

Source: CME FedWatch Tool

The jobs data has raised hopes in the market for two or even three interest rate cuts by the end of the year, with the first expected in September and the second in October.Even cautious comments from Federal Reserve officials were seen as signs that rate cuts might be coming. San Francisco Fed President Mary Daly urged caution about expecting aggressive rate cuts, saying the job market wasn’t “too weak” and suggesting the Fed could wait a bit longer. However, she also mentioned that the Fed “can’t wait forever” and downplayed the idea that tariffs were causing long-term inflation. Markets took her comments as a sign that the Fed might still cut rates in September.

This strong belief in upcoming rate cuts is helping support gold prices. Lower interest rates make gold more attractive because it doesn’t pay interest, so the cost of holding it becomes less of a concern.Looking ahead, the next big catalyst which could shape both Fed rate cut expectations and have a material impact on Gold is likely to be the US CPI data. A strong CPI print would likely trigger a significant re-evaluation of its bullish trajectory, whereas other data points might only cause minor fluctuations.

Technical Analysis – Gold (XAU/USD)

From a technical standpoint, Gold monthly candle close for July closed as a massive shooting star which hints at further downside ahead.This also marked the first bearish monthly close since December 2024 and could be a sing of the shift in momentum between buyers and sellers.However, price action since Friday has left a potential deeper pullback at risk. On a monthly chart, a candle close above the 3439 handle will be needed to invalidate the setup and for this we will have to wait the rest of the month.

Looking at a more near-term perspective, let us look at the daily timeframe. Here we can see the recent bullish move which is approaching the most recent swing high around 3431.A daily candle close above this level will invalidate the bearish setup on the daily timeframe and put bulls firmly in control.Given that tariffs are now largely set and implementation is largely what remains, the chance that we enter a period of consolidation is shrinking.This hints that a daily candle close above the 3431 may lead to more bullish momentum.

Gold (XAU/USD) Daily Chart, August 5, 2025

Source: TradingView

Source: OANDA

Source: TradingView

President Donald Trump said he’d impose increased tariffs on countries buying energy from Russia while clarifying that levies on semiconductor and pharmaceutical imports would be announced “within the next week or so.”

In a divergent approach toward Asia’s giants, Trump said he’d raise tariffs on India “very substantially over the next 24 hours,” accusing its Russian oil purchases of “fueling the war machine.” By contrast, he said he was “very close to a deal” with China to extend a trade truce that saw the two countries agree to reduce tit-for-tat tariff hikes and ease export restrictions on rare earth magnets and certain technologies.

India, which hoped to lure manufacturers amid Trump’s tariff blitz, will face a double squeeze as Trump said levies on pharmaceutical imports would be announced in the next week or so, along with tariffs on semiconductors. Unlike Beijing, which used its dominance of rare earths in trade dealings with Washington, Delhi has no such leverage.

Coming just days after Trump re-set his tariff plan with rates on imports from trade partners ranging from 10% to 41%, his latest blast of trade threats and deadlines shows his quest to remake global trade in America’s favor is far from done. That’s even as the latest economic data suggests the US economy is grappling with the fallout.

Asian stocks struggled for direction in early trade Wednesday. The S&P 500 was on the brink of all-time highs on Tuesday, before losing steam.

Trump is threatening secondary tariffs on buyers of Russian oil as he ratchets up pressure on Russian President Vladimir Putin to halt the war in Ukraine. The Kremlin is weighing options for a concession that could include an air truce with Ukraine to try to head off the threat of such sanctions.

When asked if he’d follow through on a previous threat to impose tariffs on additional countries, including China, Trump said “we’ll be doing quite a bit of that.”

In an interview with CNBC earlier Tuesday, Trump indicated he would push forward with escalated tariffs on India in particular.

“We settled on 25% but I think I’m going to raise that very substantially over the next 24 hours, because they’re buying Russian oil,” Trump said. “They’re fueling the war machine. And if they’re going to do that, then I’m not going to be happy.”

He also detailed timing and discussed potential levels of US tariffs on semiconductor and pharmaceutical imports.

“We’ll be putting a initially small tariff on pharmaceuticals, but in one year — one and a half years, maximum — it’s going to go to 150% and then it’s going to go to 250% because we want pharmaceuticals made in our country,” Trump said Tuesday in the interview on CNBC.

Trump said the US was “getting along with China very well.”

“It’s not imperative, but I think we’re going to make a good deal,” Trump said.

Still, Trump downplayed the notion that he was eager for a meeting with Chinese President Xi Jinping, saying he would only want to see his Chinese counterpart as part of an effort to conclude trade negotiations.

“I’ll end up having a meeting before the end of the year, most likely, if we make a deal,” Trump said. “If we don’t make a deal, I’m not going to have a meeting.”

“It’s a 19-hour flight — it’s a long flight, but at some point in the not too distant future, I will,” Trump added.

A preliminary deal between the US and China is set to expire on Aug. 12. That initial truce eased worries of a tariff war that threatened to choke off bilateral trade between the world’s two largest economies and also gave the countries more time to discuss other unresolved issues such as duties tied to fentanyl trafficking.

Last week, US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng met in Stockholm — the third round of trade talks between the US and Beijing in less than three months.

While Chinese officials and the Communist Party’s official newspaper had signaled satisfaction with the Stockholm talks, the pact remained fragile. Bessent had said that any agreement to extend the arrangement would be up to Trump.

Source: Bloomberg Europe

Japanese workers saw their nominal wages rise at the fastest pace in four months, reflecting gains won in annual negotiations with employers and fueling market speculation that the Bank of Japan may hike its benchmark rate in coming months.

Nominal wages increased 2.5% in June from a year earlier, accelerating from a revised 1.4% gain the previous month, the labor ministry reported Wednesday. While the figure fell short of economists’ forecast of a 3.1% rise, it still marked the steepest increase since February.

Base salaries rose 2.1%, and a more stable measure, which avoids sampling issues and excludes bonuses and overtime, climbed 2.3% for regular workers. Real cash earnings fell 1.3%, a deeper decline than the 0.7% retreat expected by economists.

Wednesday’s data provide the latest evidence of robust wage growth momentum, likely keeping the BOJ on course to consider another interest rate hike this year. Following the decision last week to keep the policy rate steady at 0.5%, Governor Kazuo Ueda reaffirmed the central bank’s commitment to raise borrowing costs if economic conditions improve, emphasizing the importance of confirming a “positive mechanism” between wages and prices.

After a US-Japan trade deal was announced late last month, BOJ watchers brought forward their predictions on when the bank might next hike, with more than 40% forecasting the BOJ will move at its October policy meeting. No economists expect a move when authorities next set policy on Sept. 19, but over half of respondents expect another increase before the end of the year.

The strong wage data reflect the outcomes of this year’s annual pay negotiations, in which workers represented by the largest umbrella group for unions secured their steepest pay increases in over three decades. Roughly 70% of those gains were likely reflected in workers’ paychecks by mid-June, based on last year’s results referenced in the Cabinet Office’s monthly economic report.

Despite robust nominal wage growth, real wages continued to decline, as rising prices outpaced salary increases. The nation’s key inflation gauge reached 3.3% in June, led by surging food prices. The number of price increases by Japan’s major food and beverage companies will exceed 1,000 in August, a 53% increase compared with the same month in 2024, according to Teikoku Databank.

With persistent inflation weighing on private consumption, gross domestic product figures for the three months through June due Aug. 15 are expected to show signs of anemic growth.

The continued retreat by real wages is likely to intensify pressure on Prime Minister Shigeru Ishiba to take stronger action to help households contend with soaring costs of living. Ishiba may be forced to propose broader price relief steps beyond his party’s pledge to make one-off cash handouts.

The ruling coalition’s historic setback in last month’s upper house election left it without a majority in either house of parliament, forcing it to collaborate with opposition parties to pass legislation. Those groups are currently working to finalize a unified proposal to press for a temporary cut to the consumption tax.

Looking ahead, policymakers including those at the BOJ expect upward pressure on wages to persist, driven largely by the nation’s chronic labor shortage, which forces businesses to raise pay in order to attract and retain workers. The nation’s unemployment rate stood at 2.5% in June, remaining below 3% for more than four years.

In the first half of 2025, a record 202 companies went bankrupt due to labor shortages, partly driven by the difficulty of raising labor costs and hiring workers.

The government has been pushing for higher wages, setting a target for a record minimum wage hike in the current fiscal year.

US trade policy poses a risk to wage growth in Japan. Washington will impose a 15% tariff on most imports from Japan. That rate is significantly higher than US import levies a year ago, potentially crimping companies’ ability to boost salaries by eroding their profit margins.

Source: Bloomberg Europe

President Trump has sent a message to President Luiz Inacio Lula da Silva saying the Brazilian leader could "call him anytime" to discuss the trade dispute centered on the country's treatment of ex-leader Jair Bolsonaro.Lula has defiantly responded Tuesday with the statement, "I will not call Trump because he does not want to talk." He further asserted that nobody gives him lessons in negotiations.Speaking during an event held in Brasilia, he made clear: "I don’t want people to think I am afraid of Donald Trump" and that "the US president had no right to announced the tariffs on Brazil the way he did" - especially as they make no sense.

Additional vehement complaints about the US position, at a moment a record-setting 50% tariff has taken effect for many Brazilian goods entering the US, are as follows via Bloomberg:

The Trump administration is demanding that charges against Bolsonaro, stemming from his rejection of the election results which brought Lula back to power, be dropped.However, the government has emphasized the independence of the judiciary. A week ago the US slapped sanctions on Brazilian Supreme Court Justice Alexandre de Moraes.But regional analyst Bruna Santos of the Inter-American Dialogue in Washington DC, has explained that dropping the charges against Bolsonaro is simply not going to happen.

"The ask for Lula was undoable," he was quoted in the Associated Press as saying. "In the long run, you are leaving a scar on the relationship between the two largest democracies in the hemisphere."As of Monday Bolsonaro has been ordered under house arrest, with the federal top court citing violations related to stoking resentment via social media and public messaging. For now at least, it looks like the government is backing down, despite the damage to trade relations and future economic pain.

Source: Zero Hedge