Gold prices fell sharply on Friday, in a continuation of volatile trading in the wake of wide-ranging US trade tariffs announced on April 2nd.
Prices fell as low as $3,018 an ounce on Friday, down from around $3,115 an ounce in late trades on Thursday.
The fall on Friday comes in the context of gold’s new all-time high of $3,226 an ounce on Thursday which came after US President Donald Trump unveiled sweeping trade tariffs on products imported into America, including baseline tariffs of 10% as well as specific reciprocal tariffs of 54% on China and 20% on the EU, among others.
Stocks sell-off prompts need for cash
The new US trade barriers sent stock markets falling sharply in the second half of the week. Some market observers said this had triggered margin calls on equity market positions, forcing traders to liquidate gold positions to cover them.
The losses for gold may also reflect a ‘buy-the-rumour-sell-the-fact’ reaction to the US tariffs. Gold prices had increased by almost 10% in March, as the markets reacted to uncertainty over the anticipated tariffs and their impact on the financial markets. As in similar events in other markets, prices can suffer a sell-off once the bullish event has passed.
It should be stated that physical gold itself remains exempt from the current wave of US tariffs. However, what matters more is its role as a safe haven in times of uncertainty.
Gold to silver ratio hits five-year high of over 100
The recent relative gains for gold have pushed the gold-to-silver ratio to a five-year high of over 100, compared with around 90 in late March. That’s the highest relative price of gold to silver since May 2020. The widening of the relative spread between the two precious metals reflects gold’s pure-play as a safe haven asset, against silver’s dual role as a precious and an industrial metal.
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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