Gold prices recently experienced a significant decline of over 2% after reaching a record high. This drop comes in the wake of US President Donald Trump’s comments, which alleviated fears surrounding a potential trade war with China. Spot gold fell as much as 2.2%, settling at a daily low of $4,220.10 per ounce. This movement erases most gains made over the previous two days.
Market Overview
Earlier in the trading session, gold had peaked at an unprecedented $4,378.69 per ounce. US gold futures also faced a downturn, dropping from a high of $4,392 to approximately $4,236.20, marking an intraday loss of 1.6%. This volatility comes after a week where bullion was on track for its largest weekly gain since the 2008 financial crisis.
Investor Sentiment Shifts
- Gold saw a surge during a period of turmoil among Wall Street investors.
- The sell-off in regional banks the previous day contributed to gold’s initial rise.
- As investor confidence returned following President Trump’s reassurances on trade negotiations, gold prices began to decline.
Market analyst Fawad Razaqzada from City Index noted that equity indices rebounded in response to Trump’s positive comments, leading to a decrease in gold prices.
Year-to-Date Performance
This year, gold has surged over 66%, driven by various factors including geopolitical issues, anticipated rate cuts, and significant buying by central banks. According to Michael Haigh, the global head of commodities research at Société Générale, strong inflows into exchange-traded funds (ETFs) have played a crucial role in boosting prices.
Future Predictions
- Société Générale anticipates gold prices could climb to $5,000 by the end of next year.
- HSBC has raised its average gold price forecast for 2025 to $3,455 per ounce.
- Investors expect a 25-basis-point rate cut at the Federal Reserve’s upcoming meeting on October 29-30.
With ongoing trade uncertainties and expectations of further US interest rate cuts, the outlook for gold remains optimistic amidst market fluctuations.
