Profit-Taking and Liquidation Drive Gold Lower Amid Global Market Decline

Gold prices plummeted in a dramatic 36-hour selloff characterized by exceptional volatility. As of 4:50 PM ET, gold futures for June delivery settled at $3,139.30, marking a significant decline of $50.90 or 1.59%. The precious metal touched an intraday low of $3,073.50, approximately $123 below its opening price, which had been near yesterday's record all-time high of $3,201.60.

Silver experienced even steeper losses, proving more sensitive to President Trump's recent trade announcements. The most active May 2025 contract plunged $2.68, or 7.73%, settling at $31.97 per ounce.

Dollar weakness partially cushioned gold's decline. The U.S. Dollar Index fell 1.63% to 101.65, recovering slightly from today's intraday low of 100.975—its weakest level since early October 2024.

The precipitous drop in gold followed President Trump's announcement of expanded import tariffs during a Rose Garden address. The President outlined plans to increase tariffs on various U.S. trading partners, intensifying global trade tensions. Canada, China, the European Union, and other nations promptly prepared retaliatory measures, raising concerns about global economic growth and international inflation.

Ole Hansen, head of commodity strategy at Saxo Bank, commented: "Gold trades a tad softer on the day after briefly hitting a fresh record high overnight... a move that was supported by geopolitical and economic tensions, as well as the weaker USD and rising inflation expectations driving down US real yields. However, while these supportive factors will continue to underpin bullion prices, a current rush to deleverage amid spiking volatility will also be felt in gold."

Uncertainty regarding the potential economic impact triggered sharp declines across global equity markets. The Dow Jones Industrial Average fell 3.21%, shedding 1,342.52 points to close at 40,435.23. The NASDAQ Composite declined 2.53%, while the S&P 500 tumbled 4.84%.

These substantial losses in U.S. equities prompted traders to liquidate gold positions to generate liquidity needed to cover losses and meet margin calls, accelerating the metal's downward movement despite underlying supportive fundamentals.

Wishing you, as always good trading,