Gold has rebounded nearly 5.5% from Monday’s low. Although the GOLD futures contract bounced off the 78.6% Fibonacci retracement level, the stabilization of chaos in the equity markets—combined with persistent concerns over the global economic outlook—could continue to support the commodity’s price.
The recent sell-off in gold appears to be coming to an end, but it was driven more by necessity than by real panic in an asset often seen as the perfect hedge against volatility. Investors are typically reluctant to liquidate gold positions, but the record-breaking declines of recent days required covering equally record-breaking losses.
Yesterday’s announcement by Donald Trump to suspend reciprocal tariffs for 90 days eased mounting fears over global economic growth. However, today’s surge in market optimism seems to overlook the still-active 10% “tariffs on everything” and sector-specific duties (metals, cars, and soon pharmaceuticals). The 125% tariff on Chinese goods also remains in effect.
Lower volatility is laying the groundwork for building new positions in gold as a hedge against the inevitable consequences of neoprotectionism. Still, growth concerns remain very much alive. Bookmakers are pricing in a roughly 50% chance of a U.S. recession in 2025 (Polomarket), and today’s CPI reading could offer fresh arguments in favor of a hawkish Fed stance.
Source: xStation5
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