On Friday, gold futures experienced another day of sharp declines, marking the largest two-day drop in percentages since August 2021. Analysts noted that traders were selling precious metals to offset losses triggered by broader market turmoil due to fears over an economic downturn caused by a trade conflict.
On Friday, global stock markets declined once more, with the S&P 500 and Nasdaq Composite indexes dropping almost 6% each. This occurred following China’s announcement of new duties at a rate of 34% on all American products set to begin on April 10th, as retaliation against President Trump's “reciprocal” tariffs.
In the meantime, Federal Reserve Chairman Jerome Powell stated that the tariffs were "higher than anticipated" and could potentially "increase inflation over the next few quarters," with the possibility of having more lasting impacts as well.
Traders pointed out more robust-than-anticipated U.S. employment figures for non-farm payroll, which "will support the Federal Reserve’s stance of postponing rate cuts,” according to Alex Ebkarian from Allegiance Gold.
Despite this, gold futures have still risen by 14.5% year-to-date, fueled by substantial buying from central banks and the commodity’s enduring attractiveness as a safeguard against economic and geopolitical instabilities.
Goldman Sachs analysts stated that the sell-off caused by tariffs presents a more appealing opportunity for investors to adopt a bullish stance on gold. This is because structural factors such as ongoing purchases of gold by central banks from emerging markets, along with increased demand for exchange-traded funds anticipated due to potential Federal Reserve interest-rate reductions and concerns about an upcoming recession, provide strong support for gold prices.
The bank still advises holding onto gold as their top commodity pick and keeps their end-of-year prediction at $3,300 per ounce.
Front-month Comex gold ( XAUUSD:CUR ) for deliveries scheduled in April concluded -2.7% On Friday, it dropped to $3,012.00 per ounce, marking its lowest closing price since March 17th and experiencing the biggest single-day drop in percentage terms since November 25th; this also affected the front-month April silver contract. XAGUSD:CUR ) ended -8.5% At $5.528 per ounce, this represents its lowest closing price since December 31 and marks the biggest single-day drop since February 2, 2021. Over the course of the week, gold dropped by 2.4%, while silver plummeted 15.9%, marking the most significant weekly decrease for silver since March 2020.
ETFs: ( NYSEARCA: GLD ), ( GDX ), ( GDXJ ), ( IAU ), ( NUGT ), ( PHYS ), ( GLDM ), ( AAAU ), ( SGOL ), ( RING ), ( BAR ), ( OUNZ ), ( NYSEARCA: SLV ), ( PSLV ), ( SIVR ), ( SIL ), ( SILJ )
Silver prices generally follow those of gold; however, over fifty percent of global silver demand stems from industrial applications like electronics and solar panels. This raises worries regarding future demand for the material should an economic downturn occur due to trade tariffs.
Although gold, seen as a safe haven during times of political and economic instability, has hit several all-time peaks this year, silver has found it difficult to surpass the 12-year high of $34.87/oz achieved last October.
Silver is expected to lag behind gold until there is greater economic certainty and a resolution in trade and tariff uncertainties, considering silver’s sensitivity to industrial performance and Purchasing Managers' Indexes (PMIs), according to Aakash Doshi, who heads up gold strategy at State Street Global Advisors.
Further details about gold and silver
- Gold Plunges Over $100, $3050 Level Resists Strongly. What’s Ahead?
- Tariffs and Rising Expenses Fuel Gold's Gains (And Aren’t Letting Up)
- China's Gold Reserves Skyrocketing
Post a Comment