Gold prices nudged higher on Tuesday, to trade a short distance either side of $3,000 an ounce for most of the day as the markets took stock after several days of losses in the equity markets.
Gold moved as high as $3,023 an ounce on Tuesday, although the market came under selling pressure later in the day, taking prices back down to $2,972 an ounce later in the day. That compared with around $2,984 an ounce in late trades on Monday.
Trade uncertainties dominate
Gold’s modest gains on Tuesday followed a slump to a three-week low on Monday, which saw prices fall below $3,000 an ounce for the first time since March 17th. Market jitters over US tariffs saw gold prices rise through March only for the gains to unwind after President Trump’s tariffs announcement of April 2 as investors liquidated gold positions to meet margin calls on equities.
Gold continues to remain buoyant due to significant uncertainties over the long-term outcome of the emerging trade war. US tariffs of 104% on some goods from China are set to take effect on Wednesday, the White House press secretary said on Tuesday, after China refused to back down from retaliatory tariffs it imposed against the US.
A clash between the world’s two largest economies raises significant uncertainties over the system of global trade that has dominated for decades. While the ultimate end-game is hard to forecast, safe havens like gold offer some sanctuary for investors looking to hedge their risk exposure.
Upcoming data
Looking ahead, traders will be watching out for Thursday’s US inflation numbers for March, to get a handle on the prospects for future interest rate changes. Opinions are currently split over the chances for a further 25 basis point interest rate cut by the US Fed at its upcoming meeting on May 7th. Beyond that, Thursday will also bring the latest weekly US initial jobless claims figures, for a status update on America’s labour market.
Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.
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