Receiving the news that President Donald Trump signed a decree on global countervailing taxes on all goods imported into the US, world gold prices quickly increased sharply. However, the precious metal quickly plummeted, at one point falling to $3,053.8/ounce.
This is a strange move, as the precious metal loses its role as a safe haven for cash flow. Despite the dominating risk-off sentiment in the financial market, gold and silver - which are considered safe-haven assets - are under strong selling pressure.
According to Kitco, the main reason is that investors take profits and sell weak buying contracts in the futures market. Jim Wyckoff - senior analyst at Kitco said that today's fluctuations are a classic example of the phenomenon of "buying rumors, selling the truth", which often occurs when the market has priced before a major event. When the official event occurred, investors took advantage of the opportunity to take profits.
Concerns about slowing global economic growth are rising, especially after the US announced new tariffs. In the context of unstable market conditions, many investors choose to "not be able to sell what they want, but sell what they can", which contributes to the sell-off of gold and silver despite the defensive mentality covering the market.
David Morrison - an expert at Trade Nation - shared: "The market reacted strongly after US President Donald Trump imposed a comprehensive tax. This information shocked the financial market, investors hastily assessed the impact. Currently, vague and worrying are everywhere. retaliatory measures from major economies are almost certain, further complicating the situation.
Gary Wagner, a commodity broker and market analyst, told Kitco that the large losses in the US stock market have forced many investors to sell gold to raise cash, in order to compensate for losses and meet deposit requirements. This has caused gold prices to fall faster, although fundamental factors are still supporting the precious metal market.
"Gold prices fell sharply after President Donald Trump announced his plan to expand import tariffs in his speech at the Red Garden. He said he would increase tariffs on many US trading partners, escalating global trade tensions.
Immediately afterwards, Canada, China, the European Union and many other countries prepared retaliatory measures, making concerns about slowing global economic growth and rising inflation on an international scale more evident," the expert said.
Mr. Ole Hansen - head of commodity strategy at Saxo Bank - commented: "Gold prices fell after hitting a new record high overnight... The recent price increase was supported by geopolitical tensions, economic concerns, a weakening USD and expectations of rising inflation, which caused real US yields to decrease.
While these factors are still supporting gold prices, the wave of leverage cuts as market fluctuations increase strongly is also affecting gold prices.
Uncertainty about economic impacts has caused the global stock market to plummet. The Dow Jones index lost 3.21%, down 1,342.52 points to 40,435.23 points. NASDAQ decreased by 2.53%, while the S&P 500 plummeted to 4.84%.
