Gold prices are hovering just above the $3,000 mark, rebounding from a dip during early Asian trading that saw bullion fall below this key psychological level. Mounting concerns over escalating trade tensions have significantly dampened trader sentiment, prompting a broad sell-off in risk-related assets. This has led to widespread losses across equity markets, with the tech-heavy Nasdaq index falling more than 20% from its previous high and officially entering bear market territory. At the same time, the US dollar has weakened against its major peers as investors adjust their expectations in anticipation of the Federal Reserve cutting interest rates more deeply and swiftly than previously forecasted in a bid to stave off a potential recession in the United States. Despite this environment—typically favourable for gold, given the flight from risk and a softer dollar—the precious metal has shed nearly 4% since Donald Trump announced the latest round of tariffs on Wednesday. This decline is largely due to portfolio managers being forced to liquidate gold positions to meet margin calls on their equity holdings. Markets are now bracing for the fallout from further retaliatory measures against the US's unilateral tariffs. The European Union is expected to respond next, following China's assertive countermeasures announced on Friday.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
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