What’s next for gold amid global market turmoil?
The price of gold whipsawed after Trump’s tariff pause, but has hit new highs.
Gold has resumed its upswing after a brief stumble when President Donald Trump paused tariffs on many countries for 90 days as worries about the US-China trade war continue to ripple through the markets.
Analysts say that the backdrop of extreme levels of uncertainty about the global economic and geopolitical landscape leaves gold prices ripe for continued gains. Investors are increasingly concerned about the inflationary impact of the trade wars and a possible recession, while the US dollar continues to weaken—all factors that are seen as supporting gold prices.
The price of gold reached a record high on April 11, topping $3,200.
Gold has been on a general upswing since last summer, with the price of the precious metal surging since Trump’s inauguration. That uptrend was interrupted on Monday and Tuesday when Trump reversed course and announced a 90-day suspension of many tariffs that he had imposed just a week before. Spot gold prices dropped 4.1% during that time frame, marking the biggest two-day selloff in dollar terms since April 2013.
Ned Naylor-Leyland, manager of Jupiter AM Gold & Silver Fund, says that drop was “a rush into cash for traders,” saying that it had “nothing to do with long-only investors.”
Historically, gold has been considered a safe asset in times of uncertainty and a protection from inflation. “Volatility in the equity markets also affected gold,” says Maurizio Mazziero, a financial analyst and commodities expert. He believes that “as happened in 2020 at the time of covid, the sharp declines in equities generated profit-taking on gold after an extremely positive period. From a technical point of view, above $2,850, we remain in a positive momentum. Below that, things could change.”
Support level for gold at $3,000 holds
“The $3,000 threshold has become a clear psychological anchor for the market, and it is proving to be a strong support level,” says Daniel Marburger, CEO of StoneX Bullion. “Whenever the price falls below it, we see immediate and considerable buying, especially by retail investors.” He adds that he saw “order volumes quadruple from the previous week” during the pullback.
Additionally, fears of stagflation in the United States (wherein inflation risks are rising while economic growth slows) have made gold more attractive as an inflation hedge. “Central banks, including in China, Russia, and the Czech Republic, have also been accumulating gold, signalling confidence in its long-term value as a store of wealth,” says Roberta Caselli, commodities investment strategist at Global X.
What to expect from gold now
Morningstar senior US economist Preston Caldwell placed the likelihood of a recession in the US at 40%-50% over the next 12 months. Market participants are starting to price in several rate cuts by the US Federal Reserve this year, which is supporting gold.
In such an environment, Naylor-Leyland expects that “gold will keep going higher in all currencies, as it is returning to its traditional role as principle risk-free, above US Treasuries, and pristine monetary collateral.”
Caselli says, “Markets will continue to favour haven assets such as gold amid geopolitical tensions. This is further evidenced by record gold investments in China, with retail investors pouring billions into gold-backed ETFs in the last week.”
She thinks that “despite short-term headwinds, gold’s role as a hedge against economic and geopolitical uncertainty should continue to support its value in the long run.”
