Gold back down near the $3,000 line after an early morning futures rally. The drop was sparked by investors choosing the dollar as a safe haven after sweeping U.S. tariffs raised fears of a global recession, however gold’s shine is only slightly dimmed as a “bullish on bullion” attitude is being maintained by analysts given the challenging economic conditions.
The Dow, S&P and NASDAQ all opened over 2% down this morning, with the S&P entering bear territory. The flight from global equities gained speed Monday after China announced retaliatory measures in response to U.S. President Donald Trump’s latest round of tariffs. The U.S. tariff announcement last week triggered a global selloff – with the S&P 500 posting its worst two-day plunge since March 2020 on Thursday and Friday, removing $5 trillion in value. Economists are increasingly speculating that the tariffs and retaliatory actions could trigger a trade war that would put the global economy into recession.
Federal Reserve Chairman Jerome Powell said Friday that the Trump tariffs are likely to raise inflation and slow U.S. economic growth. Trump stayed the course in remarks Sunday on Air Force One, saying “forget markets for a second – we have all the advantages.”
June gold futures slid 2.5% last week to settle at $3,035.40 an ounce on Comex, after the most-active contract lost 2.8% Friday. Bullion gained 11% in March after rising 0.5% in February and adding 7.3% in January. It rallied more than $500, or 19%, in in the three months ended in March, the best quarter since 1986. The metal rose 27% in 2024, its biggest annual gain since 2010. The June contract is currently down $7.90 (-0.26%) an ounce to $3027.50 and the DG spot price is $3015.20.
The tariffs and their likely impact on the economy and inflation are “significantly larger than expected,” Powell told the Society for Advancing Business Editing and Writing conference Friday in Washington.
In addition to Powell’s remarks, the U.S. monthly jobs report for March came out Friday and showed that the employment rate ticked up, even though the economy added a stronger-than-expected 228,000 jobs. The Fed closely follows labor market and inflation data when setting monetary policy. The next inflation report – the consumer price index – is due out Thursday.
Investors increased bets that the Fed will cut interest rates sooner rather than later following Friday’s developments. The central bank has been widely expected to implement long-expected cuts this summer. Lower interest rates are typically bullish for gold.
Just under half of the investors tracked by the CME FedWatch Tool now expect the Fed to cut rates at the central bank’s next meeting in May, compared with, just over half anticipating rates would remain unchanged. That’s a shift from a week ago, when 86% expected the Fed to keep rates unchanged in May.
The Fed began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year. Previously, the Fed had kept rates at 5.25% to 5.50% for a year. The Fed left rates unchanged at 4.25% to 4.50% in March. It reduced rates three times in 2024.
Front-month silver futures fell 16% last week to settle at $29.23 an ounce on Comex after the May contract decreased 8.6% Friday. Silver advanced 9.9% in March after retreating 2.4% in February and adding 10% in January. It gained 21% in 2024. The May contract is currently up $0.870 (+2.98%) an ounce to $30.100 and the DG spot price is $30.27.
Spot palladium tumbled 6.6% last week to $919.50 an ounce after dropping 1.9% Friday. Palladium gained 7.3% last month after retreating 10% in February and advancing 11% in January. Palladium dropped 17% last year. Currently, the DG spot price is down $0.10 an ounce to $930.00.
Spot platinum fell 6.6% last week to $922.00 an ounce after it decreased 4.2% Friday. Platinum increased 6.7% in March after sliding 4.7% in February and gaining 8.4% in January. Platinum lost 8.4% in 2024. The DG spot price is currently flat at $930.60 an ounce.
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