Impacted by the fluctuations in U.S. tariff policies, gold prices have continued to climb, confirming the rising trend after posting their largest single-day gain in 18 months. Following a strong 3.3% surge on Wednesday, gold prices increased by as much as 1.6% on Thursday, now less than $50 away from the all-time high set last week. A weakening U.S. dollar and expectations of Federal Reserve easing are jointly supporting the precious metals market.
These price fluctuations originated from market turmoil caused by the U.S. imposing new tariffs on around 60 trading partners. While investors feared a global economic recession, the Trump administration suddenly announced a 90-day suspension on additional tariffs for 56 countries and the European Union, maintaining the baseline rate of 10%. Jeff Currie of Carlyle Group noted that gold is sold off during liquidity crises, but policy relaxation allows funds to flow back, driving gold prices higher.
However, tensions between China and the U.S. continue to escalate. China announced an 84% retaliatory tariff, the U.S. raised tariffs on Chinese goods to 125%, with reports saying the later reached 145%. This has heightened concerns about a full-blown trade war between the world’s two largest economies. In response, China announced a 50% tariff increase on U.S. imports, raising the total tariff rate to 84%. China’s Ministry of Foreign Affairs accused the U.S. of “isolating itself from the world,” and the diplomatic war of words between the two nations has intensified.
Despite the policy fluctuations wreaking havoc on markets, gold has continued to benefit as a safe-haven asset, gaining 19% this year alone. Dominic Schnider, Head of Commodities at UBS Global Wealth Management, stated that they remain optimistic about gold, and potential future Federal Reserve easing could provide new momentum. As of London’s midday session, spot gold was trading at $3,117.15 per ounce, while the Bloomberg Dollar Spot Index fell for the second consecutive day.
Notably, the gold futures market has experienced significant volatility recently. On April 2, gold futures hit a record closing price of $3,190.20 before plunging by $134.50 in a single day. A “doji” candlestick pattern subsequently established a technical bottom. Over the past two trading days, gold prices have rebounded by nearly $200, with intraday trading on Thursday setting a new record high of $3,195.
Analysts suggest that the current market is being influenced by a combination of policy uncertainty and technical momentum shifts. The “doji” pattern indicates a temporary balance between bulls and bears, while the strong rebound following it has confirmed a reversal in trend. As global investors continue to digest changes in trade policies, gold’s role as a traditional safe-haven asset has become increasingly prominent.
