Gold prices witnessed a significant decline after US President Donald Trump’s remarks indicating the possibility of easing tariffs on China, which led to gold falling from its record highs.
Trump’s remarks and their impact on markets
At a White House press conference, President Trump announced his intention to reduce tariffs on Chinese goods “significantly” from the current 145%, without eliminating them completely. These remarks came after US Treasury Secretary Scott Besant confirmed that the current tariff levels were unsustainable, anticipating a de-escalation in the trade war with China.
Trump also made clear that he does not intend to fire Federal Reserve Chairman Jerome Powell, despite his previous criticism of him over interest rate decisions. This change in tone helped calm financial markets, with US stock indices such as the S&P 500 and Nasdaq rising by more than 2.5%.
Impact of the remarks on gold prices
Gold is known as a safe haven in times of economic uncertainty. Therefore, any signs of stability or improvement in US-China trade relations typically lead to a decline in demand for gold. Following Trump’s remarks, the price of gold fell 5%, declining from its all-time high of $3,500 to around $3,300.
Global Market Reactions
The impact of Trump’s remarks was not limited to gold alone, but also affected other currencies and markets. The US dollar rose, increasing pressure on gold prices, as gold is priced in dollars. Cryptocurrencies such as Bitcoin also saw a 6% rise, reaching a seven-week high, supported by improved risk appetite among investors.
The Future of Gold in Light of Current Developments
With ongoing trade tensions and political uncertainty, gold may remain volatile in the short term. However, any further escalation in trade disputes or deterioration in international relations could restore demand for gold as a safe haven.
The Changing Political and Economic Landscape
On the other hand, Trump confirmed that he does not intend to fire Federal Reserve Chairman Jerome Powell, despite his previous criticism. He stated that he would be more open in trade talks, suggesting a possible reduction in tariffs imposed on China. These statements came as a surprise to markets and led to a significant shift in investor sentiment during the midweek session.
Gold, considered a safe haven, lost some of its luster as risk appetite increased in the markets. Stocks and bond indices rose, while the precious metal fell towards the $3,300 level during Asian trading hours. This decline reflects profit-taking rather than a fundamental change in fundamentals.
It is expected that markets will continue to respond to political changes in Washington. Trump’s statements had previously worried investors, but he is now taking steps to calm concerns. He stated that he sees no need for further escalation with China and that his goal is to achieve trade stability.
He also hinted that future tariffs may not exceed their current levels, but may even be reduced. This moderate tone negatively impacted gold but supported other markets. On the other hand, demand for gold remains strong due to global geopolitical conditions.
In addition, Trump confirmed that Powell would remain in his position until the end of his term, dispelling speculation about sudden changes in monetary policy.
Investors Reposition
In light of these changes, investors have begun to reallocate their investment portfolios. Demand for stocks and bonds has increased, while gold funds have experienced widespread sell-offs. However, analysts believe that gold has not completely lost its status as a safe haven.
John Paulson, the renowned hedge fund manager, stated that central banks are still buying gold. He explained this by their desire to diversify reserves away from fiat currencies.
Technical Analysis Supports Further Correction
Nikki Shils, head of metals strategy, said that gold has recently over-performed. He explained that the current correction is normal after a sharp rise of more than $500 in just eight days. He added that some investors are now seeking to temporarily reduce risks.
Technically, the Relative Strength Index (RSI) has begun to decline from the overbought zone. It is currently trading at 63, indicating the possibility of further declines. index is expected to decline towards 50, a more balanced level in terms of momentum.
Key technical support is at $3,167, a level seen in early April. A break here could open the way for a further decline towards $3,100. Conversely, nearby resistance lies at $3,331, a point from which the price has already rebounded this morning.
If gold can break above the initial resistance level, it could push towards $3,415. Breaking this level could restore upward momentum and push gold to test $3,464. Nevertheless, movements remain restricted until the contours of upcoming US economic policies become clearer.
. Many investors maintain that the underlying drivers remain, especially in light of rising global debt and escalating geopolitical tensions. The ongoing trade war between major economic powers is also a strong support factor for gold.
At the same time, the weakness of major currencies, such as the Japanese yen and the euro, continues to boost demand for gold. The overall market outlook remains positive, despite the current volatility. Analysts believe that gold prices will rebound, especially if negative data from the US economy is released.
Cryptocurrency Markets Not Yet Stealing the Spotlight
Compared to Bitcoin, gold still enjoys relative superiority as a safe-haven store of value. Bitcoin has seen a strong rise in recent weeks, but it lacks the necessary institutional stability. Gold, on the other hand, has a long history.
Conclusion: The Calm Before the Storm?
Analysts believe that the gold-Bitcoin comparison will continue, but the long-term advantage remains in favor of the yellow metal. Many believe that the recent correction is a new buying opportunity, especially if US interest rates stabilize.
Overall, gold’s recent decline does not signal the end of the uptrend. Rather, it reflects a natural technical correction after an unprecedented rally. Trump’s shift in tone may continue, but fundamentals support gold. With the Fed’s next decisions awaiting, markets remain in a waiting mode.
The current correction may represent an opportunity for strategic investors to enter the market at lower levels. If geopolitical tensions return or economic data disappoints, gold will be the first to benefit from new hedging inflows.
Recent movements in gold prices and financial markets demonstrate the markets’ sensitivity to political statements and economic developments. While Trump’s recent comments may provide some reassurance, the path to long-term stability remains challenging.
