Gold recovers most of its losses while world markets sink
Gloomy economic growth outlook offers ‘perfect backdrop for further gains in gold’, says BullionVault’s Adrian Ash
By Myra P Saefong
Gold on Thursday was performing its “role as a store of value, providing liquidity in times of trouble,” said Brien Lundin of Gold Newsletter.
Gold fell victim to a selloff in global markets Thursday after President Donald Trump announced wide-ranging tariffs on foreign imports — but it’s still a clear-cut winner to hedge uncertainty, as bargain hunters helped prices for the precious metal recover much of their losses by the day’s settlement.
Gold bulls were looking to “buy the dip amid trade-war chaos,” Jake Hanley, managing director and senior portfolio specialist at Teucrium, told MarketWatch, as gold futures traded well off Thursday’s intraday lows.
Gold futures had dropped by more than $90 an ounce on Comex, from Wednesday’s record-high settlement at $3,166.20 an ounce to their intraday low of $3,073.50 on Thursday, Factset data showed.
“What we’re witnessing today is the kind of asset-wide liquidity event in which everything is sold to raise capital,” said Brien Lundin, editor of Gold Newsletter. “In this kind of liquidity vacuum, babies are thrown out with the bath water across the board.”
— Brien Lundin, editor of Gold Newsletter
“As we’ve seen in previous events like this, gold performs its role as a store of value, providing liquidity in times of trouble,” Lundin told MarketWatch. “It is the figurative piggy bank that gets broken open as traders desperately reach for cash to meet margin calls.”
Following Wednesday’s announcement of Trump’s new plan for U.S. tariffs — which include a universal tax of 10% on imported products from all other countries — U.S. benchmark stock indexes traded broadly lower Thursday, dragging down most markets along with it, including oil prices. Treasurys were an exception, rallying as investors sought safety in the bond market.
Dennis Gartman, retired publisher of the Gartman Letter, said he had sold the “vast majority” of his gold-oriented holdings on Tuesday, ahead of Trump’s announcement. He retained “only my very small holdings of actual, physical gold,” which he’s had for nearly 15 years and said he has no intention of selling, given that he owns that bullion at something close to $600 an ounce.
Gartman, who serves as emeritus chairman of the University of Akron Foundation’s endowment investment committee, said he has little intention of getting back into those gold-oriented holdings “at the moment given the confused atmosphere.”
The White House said some goods and economies would be exempted from the reciprocal tariffs, including gold bullion, according to the Wall Street Journal. Concerns that Trump’s tariffs would include gold had contributed to the metal’s rise to record highs. Traders had scrambled to move physical gold to New York from London and took advantage of a big spread between London spot prices and near-term New York futures prices.
Short term, Adrian Ash, director of research at BullionVault, said Trump’s “liberation day” tariffs were proving to be a “buy the rumor, sell the fact” event for gold prices. Gold futures on Comex had touched fresh record intraday highs above $3,200 overnight, before temporarily dipping below $3,100. settled at $3,121.70 an ounce, down $44.50, or 1.4%.
Gold recoups most of its early Thursday lossesSource: FactSet
April 2April 33,0753,1003,1253,1503,175$3,200
“Risk and uncertainty are strategic drivers of gold demand, whether they are prompted by safe-haven conditions or economic conditions that will be impacted by trade wars,” Joe Cavatoni, senior market strategist, Americas, at the World Gold Council, told MarketWatch. Gold remains “top of mind as a global asset, driven by the need for the right kind of diversification to a portfolio — one that offsets risk [and] volatility, and provides returns.”
Still, for now, the obvious move for traders is out of risk assets and into U.S. Treasurys “as traders seek to shore up liquidity and seek safety,” said Teucrium’s Hanley.
“No one can know for certain who the winners and losers will be” following the implementation of Trump’s tariffs, he said. It will all depend on trade negotiations, but “gold is likely to benefit from the ongoing uncertainty.”
Thursday’s low may actually be the “bargain” price level investors were looking for, as gold clawed back much of the session’s decline, Hanley noted, but “round-number support levels” include $3,000 and $2,800.
“If gold prices fall back to these levels and hold, it will signal that investors see value at those prices,” he said.
Longer term, BullionVault’s Ash said he believes the reasons behind gold’s “stellar start to 2025 are only stronger now that Trump has announced his tariffs.
“Weaker trade, higher input costs and shrinking margins are badly hurting the stock market, while geopolitical mistrust is deepening,” he said. “Such a gloomy outlook for economic growth offers the perfect backdrop for further gains in gold.”