Gold Retreats Sharply from $3,500 Historic Peak as Trump Softens Stance on Fed and China

Global gold markets witnessed a sharp correction yesterday afternoon and during the night after prices retreated from yesterday’s unprecedented highs.

Spot gold traded at $3,315.04, declining 0.12% from previous levels after briefly touching the historic $3,500 mark on April 22. This market reversal coincided with significant shifts in geopolitical positioning that diminished gold’s safe-haven appeal.

President Trump triggered the downturn when he unexpectedly backed away from threats to dismiss Federal Reserve Chair Jerome Powell. His subsequent expression of optimism regarding a potential trade deal with China further dampened the precious metal’s momentum.

The President stated the final tariff rate with China would decrease “substantially” from the current 145%, signaling willingness to negotiate. Treasury Secretary Scott Bessent reinforced this position, suggesting a de-escalation in US-China trade tensions might occur in the “very near future.”

These statements sparked renewed risk appetite among investors, driving them away from safe-haven assets toward equities. Technical indicators show gold prices have fallen below key support levels, with immediate resistance at $3,365.

Market forecasts suggest a potential rebound target above $3,625 if upward momentum returns. Analysts recommend traders monitor the Relative Strength Indicator for additional buy signals as prices consolidate.

Gold Market Correction

The correction affects global markets differently. In India, gold prices dropped substantially, with 24-karat gold trading at ₹9,835 per gram today after surpassing ₹10,000 yesterday. Delhi reports slightly higher rates at ₹9,850 per gram for 24K gold.

Despite today’s pullback, institutional optimism remains strong. JP Morgan predicts gold will cross $4,000 per ounce by the second quarter of 2026. Goldman Sachs recently raised its 2025 year-end forecast from $3,300 to $3,700 per ounce, citing continued central bank buying and investor demand.

First-quarter data supports this bullish outlook. Gold ETFs attracted $21 billion (226 tonnes) in the first quarter, marking the second-highest quarterly inflow in history.

North American funds captured 61% of these inflows, while European funds accounted for 22%. Asian funds contributed an impressive 16% despite representing only 7% of global assets under management.

Market analyst Kelvin Wong from OANDA attributes today’s selloff to Trump’s policy shift. “The prospect of US-China discussions alongside Trump’s withdrawal of his threat to remove Powell led to significant gold liquidation,” Wong explained.

Investors now focus on upcoming US PMI data for clues about economic health and potential Federal Reserve rate decisions. Analysts suggest the current correction presents a buying opportunity for those maintaining a bullish long-term outlook on gold.

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