Gold prices experienced a notable decline after reaching a record high earlier in the week. U.S. President Donald Trump indicated that his proposed 100% tariffs on Chinese goods are not a feasible solution. This statement impacted the market, leading to a decrease in gold prices.
Gold Prices React to Trade Tensions
On October 17, 2023, spot gold fell 0.4% to $4,309.63 per ounce after peaking at $4,378.69 during the trading session. Although the gold market saw this drop, U.S. gold futures for December delivery were slightly higher at $4,320.70, showing a 0.4% increase.
- Gold had gained approximately 7.2% that week.
- Earlier fluctuations had analysts predicting a potential significant gain, the largest since the 2008 financial crisis.
Investor Sentiment Shift
The market responded positively to news that Trump’s meeting with Chinese President Xi Jinping would proceed, alleviating some investor fears regarding escalating trade conflicts. According to Fawad Razaqzada, a market analyst, Trump’s remarks had a positive influence on equity indices, contributing to the slight decline in gold prices.
Factors Influencing Gold Prices
Gold is often seen as a safeguard during periods of economic uncertainty and tends to perform well in low-interest-rate environments. Federal Reserve Governor Christopher Waller signaled the possibility of additional rate cuts by the Fed, with expectations of a 25-basis-point reduction at meetings scheduled for October 29-30 and December.
- This year, bullion prices surged over 64% due to various factors:
- Geopolitical tensions
- Rate cut expectations
- Central bank acquisitions
- De-dollarization trends
- Strong inflows into exchange-traded funds (ETFs)
Michael Haigh, the global head of commodities research at Societe Generale, emphasized the role of resilient ETF flows in boosting prices.
Future Projections for Gold
HSBC adjusted its 2025 average gold price forecast upward by $100 to $3,455 per ounce and anticipates gold could reach $5,000 per ounce by 2026, influenced by ongoing geopolitical risks.
- Silver prices also saw fluctuations, with spot silver dipping 1.7% to $53.32 per ounce after hitting a record high of $54.47.
- Platinum and palladium experienced declines, with prices falling to $1,646.50 and $1,542.10, respectively.
Overall, the dynamics of the gold market, influenced by economic and geopolitical factors, continue to attract investor attention.
