Gold prices became choppier in April as risk-off selling hit all markets. During this, gold set a new high at $3,500 per oz 

• President Donald Trump’s reciprocal tariffs caused widespread sell-offs across markets, with even gold being sold as investors needed to raise money for margin calls in less liquid markets
• After dropping 6.6%, prices rallied to set fresh highs, before rebounds in other markets, including the US dollar, led to another pull-back in gold prices. At the end of April, prices were 6.5% below the April high 
• Central banks and ETF investors continued to buy gold, with ETF purchases in April the largest since buying resumed in May 2024. Central banks bought a net 17 tonnes in March.
• The funds trading Comex gold have been profit-taking. The net long fund position dropped 35% during April. Despite this selling, gold still managed to set a new high and closed up on the month
• Geopolitical risks remain elevated and the changes underway are not temporary - a new world order is forming and there are significant risks as this happens 

Silver is still struggling to perform like gold, after its early-April sell-off, it failed to climb back to the March highs 

• There is a significant anticipation for silver prices to rise as demand is set to grow at a faster pace as the energy transition expands geographically and the AI evolution gains momentum. But, silver seems in no hurry to start this journey

PGM prices continue to follow silver’s lead and with industrial demand likely to be hurt by trade wars, the outlook remains subdued 

• There is more talk of production cuts if prices do not climb. There was good fund- buying interest in platinum into the sell-off

Gold reached $3,500 per oz, before profit-taking emerged 

Gold prices wobbled in early April after President Donald Trump announced his reciprocal tariffs, which led to broad based selling, including in gold. Counter intuitively, despite the raised uncertainty and concern that the tariff announcements brought, (which you would expect would boost safe-haven demand,) gold’s initial reaction was to sell-off. This often happens as an initial reaction, as traders and investors need to sell liquid assets quickly to raise cash to pay margin calls against less liquid assets. Gold’s secondary reaction was then more in line with expectation. As assets are sold, some of the newly realised money is then put into gold. Hence, gold sold off 6.6% from $3,167.65 per oz to $2,957.10 per oz between April 3-7, before racing up to $3,500 per oz on April 22. At the high, gold prices were up 33.4% from the end of 2024 and up 93.3% from the start of the rally in October 2023.

End of rally, or just a pause?

Since setting a fresh high at $3,500 per oz, prices have slipped back to $3,202.65 per oz, a drop of 8.5% from the high. Given the strength of the rally, such a pullback does not look much and indeed could be just a bout of consolidation as the market absorbs profit taking. While there has been some thawing in the tariff wars, which has provided some relief to the economic/trade situation, many of the other underlying supporting factors that have been driving gold prices higher, such as geopolitical concerns over Russia, the Middle East and China, as well as deglobalisation, de-dollarisation and high debt levels, have not gone away. Indeed, it seems unlikely that the economic/trade issues have gone away for good, given “Tariff is the most beautiful word in the dictionary”, according to President Donald Trump. With Trump relaxing some of his excessive stances on tariffs, broader markets have recovered and the dollar, as seen by the Dollar Index, has managed to halt its decline and rebound 2.5% from April’s low of 97.91. That said, the rebound is not much considering the dollar had fallen 11% from its January high at 110.18. The Dow Jones Industrial Average has reclaimed 77% of its recent losses, it was around 42,500 before the recent sell-off, it fell to a low of 36,612 on April 8 but has since recovered to 41,165.

12 May 2025 | Categories: Gold, Silver, Dollar, US, Platinum, Palladium, UK

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