By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
Following Trump’s Liberation Day on April 2, the price of gold fell from all-time highs as hedge funds saw the largest margin calls since COVID-19. In reaction to US President Trump’s tariff announcements, prices first surged to a new record high of $3200/oz last week, but in the latter two days of the week, they dropped back well below $3000.
“Liberation Day” saw US President Donald Trump declare that all imports into the US would be subject to a 10% baseline tariff starting on April 5. Saudi Arabia, Australia, and the United Kingdom are among the nations that will only be subject to this base rate. Additionally, since 25% tariffs imposed in March on Canada and Mexico for failing to do enough to stop migration and fentanyl trafficking still stand, these nations will not be subject to this 10% rise. On April 9, the President announced that they will also implement harsher reciprocal tariffs on roughly 60 countries they label as “worst offenders.” The new regime will impose duties of 20%, 54%, 26%, and 24% on the European Union, China, India, and Japan, respectively. Trump also affirmed that all cars built in other countries will be subject to 25% tariffs.
Gold rose above $3,100 after China’s Finance Ministry said on Friday that it would retaliate by imposing further 34% tariffs on all US imports starting on April 10. As the trade war between the United States and China intensified, financial market instability persisted. Powell also called into question Fed easing bets, saying that tariffs will probably affect the US economy by slowing growth and rising inflation.
Kristalina Georgieva, managing director of the International Monetary Fund, stated that day that the Trump administration’s broad tariffs pose a serious threat to the world economy at a time when growth has been slow. In the meantime, Fitch Ratings stated that, due to higher-than-expected tariffs, US GDP in 2025 is probably going to be less than the 1.7% they had predicted in March. “Tariff hikes will result in higher consumer prices and lower corporate profits in the US,” they stated.
Market players will keep an eye on any new developments in US trade policy. Investors might avoid preparing for a possible US economic slowdown and aid in the USD’s dramatic recovery if the Trump administration backs off and begins talking with countries to remove tariffs. On the other hand, if geopolitical tensions persist and US trading partners respond with retaliatory tariffs, gold is probably going to continue to gain from safe-haven flows. It is reasonable to predict that gold will continue to be volatile in the foreseeable future at this point.
During trading, the price occasionally dropped more than $100 from the previously noted record high. Gold frequently faces initial pressure during periods of heightened risk aversion. This is because market players frequently sell their gold holdings to make up for losses in other areas. Typically, gold recovers its losses quickly, and this time might be no exception.
In the short run, gold prices appear to have peaked at about $3200 (~Rs 91400). A further sell-off towards $2900 (Rs 85000) may occur if prices remain below $3000 (~Rs 88000). If not, prices are predicted to settle this week between $3000 (about Rs. 88,000) and $3100 (about Rs. 90000).
Gold Jun Futures Daily Chart
As concerns over demand for the industrial precious metal dominated the mood due to recession fears resulting from U.S. President Donald Trump’s wave of tariffs, silver prices saw the worst 20% sell-off in the last three days, from $35 (~Rs 100,200) to $28 (~Rs 86500). The gold-to-silver ratio has risen above 100 as a result of this sell-off, and the prices of gold/10 grams and silver/kg are currently trading at par.
I believe that the worst is over, and silver will likely consolidate around $30 for some time. At these levels, buying will likely resume because there is still a demand-supply imbalance, which will keep prices stable.
Silver May Futures Daily Chart
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