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Gold Price Forecast: XAU/USD attracts some sellers below $3,000 as Trump's tariffs hit

  • Gold price slumps to near $2,985 in Monday’s early Asian session.
  • The stock market selloff has prompted investors to cover losses. 
  • Intensifying trade war and geopolitical risks could boost the safe-haven demand, benefiting the Gold price. 

The Gold price (XAU/USD) faces some selling pressure to around $2,985 during the early Asian session on Monday, pressured by some profit-taking. The precious metal extends the decline as a fall in the US stock market has prompted traders to liquidate gold positions to create the necessary liquidity to cover losses in the stock market.

The recent sharp sell-off in the US stock market on Friday was about raising cash to cover margin calls after US President Donald Trump announced new reciprocal tariffs on goods from many countries. However, the downside for the yellow metal might be limited due to the supportive fundamentals. “Bargain hunters will rush in next week to buy cheap gold and silver, helping the precious metals to rally again,” said Rich Checkan, chairman and CEO of Asset Strategies International.

Additionally, the global economic uncertainties and escalating geopolitical tensions could boost the safe-haven flows, supporting the Gold price. Russians shelled more than 30 localities in the Kherson region, including residential areas of Kherson. Seven people were wounded, the Kherson regional military administration's Oleksandr Prokudin reported. Despite the volatility," gold is still a safe-haven place for many investors," said Matt Simpson, a senior analyst at City Index.

Gold FAQs

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.


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Lallalit Srijandorn

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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