Gold Rises With Trump’s Tax Bill Seen Widening US Deficits

Key Points

• Research suggests gold prices rose to $3,341.80 per ounce on July 1, 2025, amid concerns over Trump's tax bill widening US deficits.

• It seems likely that the bill's projected deficit increase of $2.4 trillion to $3.8 trillion over a decade is driving inflation fears, boosting gold as a safe-haven asset.

• The evidence leans toward economic uncertainty from the bill and tariffs contributing to gold's record high, though controversy exists over fiscal impacts and market reactions.

Gold Price Surge

On July 1, 2025, gold prices reached a record high of $3,341.80 per ounce, reflecting a 1.17% increase from the previous day. This surge is linked to market reactions to Trump's tax bill, which is seen as significantly widening US deficits.

Connection to Trump's Tax Bill

Trump's tax bill, the "One Big Beautiful Bill," passed the Senate on July 1, 2025, with estimates suggesting it will add $2.4 trillion to $3.8 trillion to the federal deficit over the next decade. This increase is expected to raise inflation concerns, as higher deficits can lead to increased government borrowing, potentially devaluing the dollar and pushing interest rates up.

Economic and Market Context

Gold is traditionally viewed as a hedge against inflation and currency instability, making it attractive during periods of economic uncertainty. The bill's fiscal impact, combined with Trump's tariff policies, has heightened market volatility, further driving investors toward gold as a safe-haven asset.

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Detailed Analysis of Gold Price Rise Amid Trump's Tax Bill and Widening US Deficits on July 1, 2025

This report provides a comprehensive analysis of the rise in gold prices to $3,341.80 per ounce on July 1, 2025, in the context of President Donald Trump's tax bill, known as the "One Big Beautiful Bill," and its projected impact on widening US deficits. The analysis is based on recent market data and news reports, ensuring a thorough understanding of the economic and market dynamics as of 12:09 PM PDT on July 1, 2025.

Background and Context

The "One Big Beautiful Bill," a comprehensive legislative package spanning 940 pages, was passed by the US Senate on July 1, 2025, with a 50-50 vote, Vice President JD Vance casting the tie-breaking vote. The bill aims to extend and make permanent many tax cuts from Trump's 2017 term, including measures like no taxes on tips and overtime pay, while implementing significant spending cuts, particularly to Medicaid and SNAP. However, its fiscal impact has raised concerns, with estimates from the Congressional Budget Office (CBO) and other analyses projecting a substantial increase in the federal deficit.

Gold Price Surge

As of July 1, 2025, gold prices rose to $3,341.80 per ounce, marking a 1.17% increase from the previous day and a 43.41% rise compared to a year ago, according to trading on a contract for difference (CFD) that tracks the benchmark market . This record high aligns with the user's observation of gold rising, reflecting market responses to economic uncertainty.

Historical data indicates gold has been on an upward trajectory, with a high water mark of $3,339 per ounce achieved on April 16, 2025, driven by inflation and geopolitical instability

. The recent surge, however, is particularly linked to the passage of Trump's tax bill and its fiscal implications.

Connection to Trump's Tax Bill and Deficit Widening

The tax bill is projected to have significant fiscal impacts, with various estimates highlighting the deficit increase:

• The CBO analysis, released in June 2025, estimates the bill will cut taxes by $3.7 trillion but increase deficits by $2.4 trillion over the next decade .

• Another report suggests the bill could add $3.8 trillion to the US debt, with critics like Representative Thomas Massie calling it a "debt bomb ticking" .

• Penn Wharton Budget Model estimatesprimary deficits would increase by $5.1 trillion before economic effects, though this is larger than the reconciliation cap .

These deficit increases are seen as exacerbating national debt levels, with the US public debt potentially exceeding post-World War II levels relative to GDP. This has led to fears of inflation, as higher deficits can increase government borrowing, putting upward pressure on interest rates and devaluing the dollar .

Economic and Market Context

Gold is traditionally viewed as a safe-haven asset, retaining value during times of economic uncertainty, inflation fears, and currency instability. Unlike fiat currency, gold is a scarce resource used in tangible goods, making it attractive when investors fear monetary devaluation . The tax bill's passage, combined with Trump's tariff policies announced earlier in 2025, has heightened market volatility, further driving demand for gold.

Analysts have noted that the bill's fiscal impact, including a projected deficit increase of $2.5 trillion over a decade, undermines confidence in America's economic exceptionality, supporting higher gold prices .

Controversy and Market Reactions

The tax bill's impact on deficits has sparked controversy, with fiscal conservatives and Democrats criticizing the potential for increased national debt. Elon Musk, for instance, has opposed the bill, calling it a "disgusting abomination" for its fiscal impact, particularly on renewable energy ([Musk's Opposition]([invalid url, do not cite])). This controversy adds to market uncertainty, reinforcing gold's appeal as a hedge.

Market reactions have been mixed, with gold prices extending gains after Trump's tariff announcements in April 2025, reaching near all-time highs . The interplay between tariff policies and the tax bill's deficit impact has created a volatile environment, with gold benefiting from safe-haven inflows.

Summary Table of Key Impacts

Factor	Impact on Gold Price	Estimated Deficit Impact	Source
Tax Bill Deficit Increase	Drives inflation fears, boosts gold as safe-haven	$2.4T to $3.8T over 10 years	CBO Estimate
Tariff Policies	Heightens economic uncertainty, supports gold demand	N/A	Gold Price Hits Record
Federal Reserve Response	Potential delay in rate cuts due to inflation, favoring gold	N/A	Gold Price Today

This table summarizes the key factors driving gold prices, highlighting the fiscal and market dynamics.

Conclusion

The rise in gold prices to $3,341.80 per ounce on July 1, 2025, is directly linked to the passage of Trump's tax bill, which is projected to widen US deficits by $2.4 trillion to $3.8 trillion over the next decade. This deficit increase has heightened inflation fears and economic uncertainty, driving investors toward gold as a safe-haven asset. Combined with Trump's tariff policies, the bill's fiscal impact has created a volatile market environment, reinforcing gold's appeal. While controversy exists over the bill's deficit implications, the current market trends support the connection between widening deficits and rising gold prices.

Key Citations

• Trump Tax Cuts 2025: Budget Reconciliation | Tax Foundation

• How Trump’s big bill will affect taxes, the deficit and health care, according to the budget office | PBS News

• US House narrowly passes Trump's sweeping tax-cut bill, sends on to Senate | Reuters

• Big Beautiful Bill House GOP Tax Plan: Preliminary Details and Analysis

• Here's what's in the GOP megabill that's just passed the House : NPR

• 2025 Tax Cuts Tracker

• 50 Wins in the One Big Beautiful Bill – The White House

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