Gold Price Rebounds as US Passes OBBB
Wednesday, 7/02/2025 12:27
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PRICE of
GOLD held onto most of yesterday's steep rebound from 5-week lows on Wednesday, trading at what were new all-time highs in terms of most major currencies this April, as global stock markets rose with longer-term borrowing costs following Senate approval of US President Trump's "One Big Beautiful Bill".
Having passed the House of Representatives in May with a vote of 215 to 214 plus 1 abstention, last night's vote was again split on party lines, with Vice President J.D.Vance casting the tie-breaking vote to pass the Bill by 51-50.
"I think the OBBB would almost unquestionably be good for the US economy over the next couple of years,"
says one banking economist, echoing what a letter published Sunday from the American Bankers Association said about tax reliefs under the new Act.
With gold trading above $3340 per Troy ounce today after rallying by more than $100, the Dollar today steadied above Tuesday's fresh 3-year lows on its DXY index against other major currencies.
Washington's borrowing costs ticked higher, with the yield on 10-year Treasury bonds rising 0.05 points from Monday's 2-month low of 4.23% per annum.
With latest data confirming that central banks as a group continued to
buy gold in May, "We continue to argue that gold's rally isn't about demand, it's about trust," says Canadian brokerage TDS' senior commodity strategist Daniel Ghali.
"We believe we are in the midst of the third major change in the monetary order with striking analogies to the 1970s."
The Dollar's steep decline since Donald Trump re-took the White House saw gold outperform for US investors across the first 6 months of 2025, rising 25.9% compared to a gain of 15.4% in UK Pounds and 11.9% in Euro terms.
But on a daily average basis, gold's H1 performance was more consistent between currencies, with its Jan-to-June price of $3065 per Troy ounce showing 19.4% rise from H2 2024's average price against 18.8% in UK Pounds and 18.2% in Euros.
"If [geopolitical] risks are not sufficiently high to keep investors piling into gold, then the absence of underlying physical buying can ease prices," says global banking giant and London bullion clearer HSBC, warning that "the vast bulk of the rally has been put in.
"While gold's upward momentum may carry it higher in the near term, a combination of physical and financial market factors may tame the rally and weigh on gold by the end of this year."
HSBC has
now raised its 2025 average gold price forecast by $200 per ounce to $3215 having originally come into 2025 forecasting an average price of $2687.
Below the New Year's consensus outlook of $2735, that forecast said "the USD is likely to rally modestly this year, and this could curb gold rallies."
Silver meantime held steadier than gold, trading above $36.30 per Troy ounce ahead of Wednesday's US opening.
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