US Dollar Surge in July: Gold Holds Steady Amidst Tariffs, Oil Rises on Geopolitical Risks

The global financial landscape is currently undergoing a nuanced rebalancing, notably marked by a significant resurgence of the U.S. dollar in July. This robust currency performance contrasts with more cautious movements observed in gold and oil markets, where prevailing geopolitical tensions and evolving international trade policies are serving as primary drivers of market sentiment.

• The WSJ Dollar Index achieved its strongest monthly gain in nine months in July, ending a six-month losing streak.
• Gold prices remained stable amid uncertainties arising from new U.S. tariffs on Canada (25% to 35%) and extended trade negotiations with Mexico.
• Crude oil prices rose, supported by escalating geopolitical tensions, notably President Trump’s shortened August 8 ceasefire deadline for Ukraine.
• The U.S. dollar’s strong July performance, including a 2.95% monthly gain, signaled a pivotal inflection point despite remaining below previous highs.
• Analysts suggest recent trade actions could indicate new tensions and potentially higher inflation and interest rates.

U.S. Dollar Rebound Signals Inflection Point

The WSJ Dollar Index registered its most substantial monthly gain in nine months in July, climbing by a robust 2.95%. This decisive surge effectively ended a six-month losing streak for the index, culminating in a run of six consecutive daily ascents. While the dollar index accumulated a 2.42% gain during its final six sessions—marking its most prolonged winning streak since December 2024—it still trades 7.95% below its September 2022 record peak and 6.58% below its 52-week high set in January. Despite an overall year-to-date loss of 5.81%, July unmistakably represented a pivotal inflection point for currencies influenced by restrictive monetary policies.

Gold Holds Steady Amidst Tariff Uncertainty

Gold prices largely maintained stability in early Asian trading sessions, as market participants evaluated the implications of ongoing commercial negotiations for global inflation. President Donald Trump recently granted a 90-day extension for a trade agreement with Mexico, though he simultaneously clarified that sectoral tariffs would remain in immediate effect. In parallel, the White House announced new tariffs on Canada, escalating them from 25% to 35% via a recently enacted executive order. Samer Hasn of XS.com commented that these trade actions might indicate the emergence of fresh tensions rather than a fleeting phase, potentially intensifying concerns over rising inflation and interest rates. Spot gold remained largely unchanged at $3,290.67 per ounce, a price point indicative of a tactical pause amidst prevailing political and commercial uncertainties.

Oil Prices Supported by Geopolitical Risk

In the energy markets, crude oil prices registered marginal gains during Asian trading, propelled by renewed concerns regarding potential supply disruptions linked to the ongoing conflict between Russia and Ukraine. President Donald Trump has reportedly accelerated the deadline for a ceasefire in Ukraine to August 8, a strategic move designed to intensify diplomatic pressure on Moscow and, consequently, elevate geopolitical risk premiums. Janiv Shah of Rystad Energy observed that this escalating threat provides critical support to oil prices, as global markets closely monitor for any potential interruptions to energy flows or regional production capabilities. While current market conditions largely confine crude within a defined technical range, prospective geopolitical developments—especially the implementation of intensified multilateral sanctions—possess the inherent potential to destabilize this precarious equilibrium. West Texas Intermediate (WTI) crude climbed 0.1% to $69.33 per barrel, with Brent crude also advancing 0.1% to settle at $71.80, underscoring the market’s pronounced sensitivity to evolving diplomatic narratives.