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Gold has surpassed the $3,100 mark, reaching a new high of $3,121, showing an increase of over 1%. Economic and political uncertainty, alongside central banks potentially reducing interest rates, has bolstered demand for the precious metal.
The impact of Trump’s tariffs is a key consideration for both gold and broader markets. If these tariffs lead to a recession or global slowdown, gold is likely to continue its upward trajectory. Conversely, if the tariffs do not have a major impact, there may be potential for a considerable pullback following the recent price surge.
Momentum Shifts In Favor Of Gold
We are now looking at a market where immediate momentum has been tipped further in favour of gold, which has climbed above $3,100 per ounce for the first time. The price touched $3,121, marking a more than 1% increase in just a single trading session. This jump is backed by a familiar mix of drivers: geopolitical tension, monetary policy speculation, and nervous money rotating its way from riskier assets into stores of value.
What’s pushing this movement? In simple terms, we see a reinforced desire for safe havens, particularly given the renewed chatter around interest rate cuts. Policymakers remain under pressure to stimulate economies teetering at the edge of contraction, and rate cuts—expected or otherwise—tend to lower yields on government bonds, bringing gold into sharper focus. With real returns falling, the opportunity cost of holding metal also drops, often attracting funds back into commodities.
Adding to that, trade policy out of Washington is now a major market input. The announcement of fresh tariffs, presumably aimed at rebalancing international manufacturing flows and shoring up domestic sectors, introduces a level of unpredictability that few traders welcome. So far, gold has responded in a very textbook manner—rising sharply as investors accounted for the chance of weaker global demand.
Yet this isn’t a one-way street. If the tariffs prove to be more bark than bite, the market may have taken this rally too far, too fast. There’s room for correction, especially if economic data starts surprising to the upside. In such a scenario, many positions relying on momentum could be left exposed rather quickly.
Economic Data And Market Sentiment
We’re keeping a close eye on economic prints over the coming fortnight. If purchasing managers’ indexes or jobless claims come in stronger than expected, it’s reasonable to assume that upward pressure on gold could ease, if not reverse temporarily. Market participants are sensitive to any signal that implies the global economy is more resilient than feared.
Powell’s recent shift towards a more cautious tone also can’t be ignored. The market didn’t miss the softer jawboning around inflation control, and as long as that narrative holds, a rate plateau or eventual cut seems increasingly baked in. That backdrop assists metal markets, which respond well to looser monetary climates.
From a positioning perspective, traders holding long-dated calls may see short-term gains pushed up, but need to avoid late entries unless underpinned by macro validation. Spot movements based purely on reaction risk fading quickly if the calendar lightens up. Meanwhile, implied vols continue to trade at the upper edge of the recent range, hinting at further directional bets being priced in rather than unwinding.
We would be rotating into calendar spreads for a less directional angle while keeping delta exposure modest. Sell-side desks have started to price more modest near-term upside into their skew models, especially ahead of central bank meetings next month. This opens up relative value for those rolling existing positions, but a reassessment of tails is warranted if tightening fears are exonerated by softer prints.
Ultimately, the key is how much risk protection premium remains in the system. If policymakers walk back any tapering expectations, bullion won’t keep rising indefinitely—and traders layering into leveraged long structures should be nimble.
