A Fed dissent could aid gold’s ascent

Fed dissent looms as gold climbs on policy shift bets

Markets are increasingly anticipating that the July FOMC meeting could mark a pivotal shift—not because of the outcome, which is widely expected to be a rate hold at 4.25%–4.50%, but because of growing chances of dissent within the committee. Speculation centers on Governor Christopher Waller and Vice Chair Michelle Bowman, both of whom have hinted at favoring more aggressive action.

If either casts a formal vote in favor of a cut, it could cement expectations for easing at the September meeting. Such a move would also render the final two Fed meetings of the year “live,” boosting the appeal of non-yielding assets like gold. A weaker dollar, falling Treasury yields, and a perceived policy pivot form the ideal backdrop for further gains in the precious metal.

Gold is already up 27% year-to-date and appears poised to retest its all-time high set in April. Central bank demand remains strong, adding further support to its ascent. The market’s focus will be squarely on Jerome Powell’s post-decision press conference, where any shift in tone could guide expectations well into the fall.

Economic data and Fed tone could shift dollar direction

While the Fed decision itself may be a formality, upcoming data will shape the market reaction. The release of US ADP employment and the advance Q2 GDP figure—expected at an annualized 2.4% following Q1’s -0.5% contraction—could amplify rate expectations.

However, the expected rebound in Q2 growth is seen as largely technical, driven by an inventory reversal linked to earlier tariff front-loading. That weakens its signal as a driver of domestic strength. As a result, even a firm GDP print may not deter the Fed from pivoting dovish in response to growing global uncertainty and lingering inflation risks.

Futures pricing currently assigns a 65% chance to a September rate cut. Should Powell adopt a more cautious or inflation-tolerant tone, those odds could climb sharply.

US-China trade talks stall; pressure mounts on Trump

Trade tensions resurfaced as negotiations between US and Chinese officials in Stockholm concluded without a breakthrough. The talks—meant to extend the current tariff truce before its August 12 expiration—now leave the final decision in the hands of President Trump.

Treasury Secretary Scott Bessent stressed that only Trump can authorize an extension and hinted at a possible return to negotiations in 90 days. While the meetings yielded progress on technical issues like rare earth exports, no framework was agreed upon.

Failure to extend the truce could trigger a reversion to triple-digit tariffs, reviving global trade fears and adding volatility to equity and currency markets.

BoC likely to hold, but rate cut risks remain

The Bank of Canada is also expected to keep its overnight rate at 2.75%, marking the third straight meeting without action. A slight drop in the unemployment rate to 6.9% has given policymakers room to pause, despite core inflation remaining sticky at 2.6%.

With monetary policy now in neutral territory, the BoC appears to be waiting for more clarity on inflation dynamics and the potential delayed impact of global tariffs. Nonetheless, the market continues to price in further easing, with a Reuters poll showing a majority of economists expecting a 25bps cut in September, and another by year-end.

If realized, that would bring the policy rate to 2.25%, in line with softening domestic demand and broadening disinflationary pressures.