Bond Market Weakness Could Drive Gold Prices Higher Despite Tariff Pause: Peter Schiff

Economist Peter Schiff warned that a bond breakdown might be coming soon, which could be positive for gold prices.

Bullion fell about 3% to $3,225.28 an ounce on Monday after the U.S. and China agreed to pause tariffs for 90 days, reprieving global markets.

“While investors celebrated the relief rally in stocks and the dollar, they glossed over renewed weakness in the bond market,” Schiff said in a post on X.

Gold prices rallied last month after a trade war between the U.S. and China put pressure on government bonds. The yellow metal is viewed as a safe-haven investment during times of uncertainty.

“Gold was rising long before Trump picked a fight with China, and it will continue to rise even if Trump never goes another round,” Schiff said in a post on X.

Debt and inflation would continue to drive investment into gold, he added.

The market expects the U.S. Federal Reserve to cut benchmark rates by 55 basis points, starting in September.

Lower interest rates are viewed as a catalyst for gold prices as investors tend to park their money in gold as a hedge against inflation.

“Higher tariffs would've made both recession & inflation worse, but the lower tariffs that remain are still problematic for an already weak economy with strengthening inflation,” Schiff added.

Treasury yields were little changed early on Tuesday as investors weighed the recent China-U.S. trade deal and looked ahead to key U.S. inflation data. As of about 4 a.m. ET, the 10-year yield climbed to 4.457%, while the 2-year yield slipped to 3.983%, according to a CNBC report.

When yields go up, bond prices move lower.

The SPDR Gold Shares (GLD) exchange-traded fund (ETF) and iShares Gold Trust (IAU) ETF have tracked gold prices and are up over 22% this year.

On the other hand, the SPDR S&P 500 ETF (SPY) and the Invesco QQQ Trust (QQQ) ETF are down about 1.09% and 1.25%, respectively, in 2025.

Also See: China Deepens Latin American Ties Following US Tariff Truce As Xi Blasts Trade Wars Again

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