Gold "stops growth" - "Easing" global trade tensions reduces the value of the metal
Gold fell sharply from a record high last week as risk sentiment faded after Donald Trump's dovish tone on China tariffs. While the price decline could continue in the short term, analysts expect gold to extend its long-term rally due to ongoing uncertainties.
Global stock markets experienced a easing rise amid signs of an easing of tensions in the global trade war, particularly between the United States and China.
Both spot gold and futures fell about 6.5% from their record highs reached last Tuesday. Investors may have started to take profits from the precious metal as demand for safe-haven investments has eased.
Demand for safe-haven assets has surged amid economic uncertainty stemming from U.S. President Donald Trump's tariffs. Gold, a traditional hedge against financial crises and inflation, has outperformed global markets, rising more than 25% so far this year. Indirectly, the strengthening euro, which has put significant pressure on the U.S. dollar, has also contributed to the precious metal's rise.
The feeling of “American supremacy” has significantly reduced the value of the dollar in 2025, while the euro has strengthened significantly against the greenback. The EUR/USD pair has risen by 11% since the beginning of February. “The strength of the euro and the weakness of the US dollar were again a key driver of gold’s performance, along with an increase in tariff fears,” the World Gold Council said in a report. The euro’s rise also made gold less expensive for European investors, with exchange-traded funds buying reaching $1 billion in Europe in March, making it the second-largest buyer among the regions.
However, the precious metal could face further risks in the near term based on several factors, including fading risk sentiment, signals of overbought conditions, liquidity risks and a slowing pace of purchases by global central banks.
The main reason for gold's decline has been the removal of risk sentiment after Trump said he would cut tariffs "significantly" on China, triggering a broad rally in global stock markets. Trump's change in stance could lead to a rebalancing among fund managers and retail investors.
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