Gold Prices Cool Off: Trade Tensions Ease, but Risks Remain
Gold Takes a Break After Record Highs
Gold prices took a dip on Tuesday, April 29th, after reaching record highs last week. The easing of trade tensions between the US and China seems to have reduced the metal’s safe-haven appeal.
Spot gold fell 0.4% to $3,329.12 an ounce, while US gold futures dropped 0.2% to $3,342.40 an ounce. In India, 24-karat gold was priced at ₹9,797 per gram, 22-karat at ₹8,980, and 18-karat at ₹7,348.
Trump’s Softening Stance Fuels the Pullback
Gold had soared to an all-time high of $3,500 an ounce (~₹99,350 per 10 grams) last week. However, former US President Donald Trump’s hints about a more conciliatory trade approach towards China, along with news of China exempting some American goods from tariffs, seem to have dampened the metal’s allure as a safe haven.
Even as trade tensions eased, other global risks emerged, including a potential meeting between a senior Trump aide and Russian President Vladimir Putin, and ongoing concerns about Iran’s nuclear program.
Central Bank Buying and Technical Signals
The Reserve Bank of India bolstered its gold reserves by 57.5 tonnes in FY24, adding to the long-term support for gold prices. Globally, central banks have been steadily increasing their gold holdings as a hedge against US dollar weakness and geopolitical uncertainties.
Technically, gold formed a “Shooting Star” pattern last week, which analysts interpret as a potential signal of a reversal. If gold prices stay below $3,300 per ounce, they could slide further to $3,240 and even $3,175.
On the flip side, if prices rebound above $3,380, gold could rally back towards $3,435 and potentially even $3,500.
Volatility Expected to Persist
Experts are advising investors to approach gold with caution, as volatility is likely to continue. Market attention is now focused on key US economic data, including today’s job openings report and Friday’s (May 2nd) non-farm payrolls release.
While global uncertainties continue to provide support for gold, sharp price swings remain a possibility.
