Key Points:
- Gold fell as much as 2.5% after a strong four-day rally.
- Investors are confused by President Trump’s new 15% global import tax.
- The Supreme Court recently blocked the administration’s previous tariff strategy.
- Banks predict gold could hit $6,200 an ounce in the coming months.
Gold prices pulled back on Tuesday, ending a streak of four straight days of gains. The precious metal dropped as much as 2.5% before recovering slightly, as a weaker U.S. dollar helped limit the damage. This decline follows a volatile week where gold climbed more than 7% as investors rushed to safe assets amidst legal and geopolitical chaos.
The market remains in a state of confusion following a major legal defeat for the White House. After the Supreme Court struck down President Donald Trump’s previous tariff system, the President immediately announced a new strategy. An order for a 10% global import tax went into effect Tuesday, with plans to raise it to 15% soon. This rapid shift in trade policy has left investors and foreign trading partners scrambling to understand the new rules.
European nations are already raising red flags. An assessment by the European Union suggests these new taxes might violate existing trade agreements, adding more strain to international relations. Christopher Hamilton, a strategist at Invesco Ltd., noted that while these headlines keep uncertainty high, gold is likely to stabilize rather than break out aggressively in the short term.
Despite the daily price drop, the long-term outlook for gold remains strong. The metal has managed to hold its ground above the $5,000 per ounce mark following a crash earlier this month. Major financial institutions, including Deutsche Bank and Goldman Sachs, believe prices will recover fully. They point to fears over the Federal Reserve’s independence and global instability as key drivers.
Geopolitics continues to play a massive role. The United States has deployed its largest military force to the Middle East in over two decades as nuclear talks with Iran resume. UBS predicts that these persistent risks will push gold prices even higher, potentially reaching $6,200 an ounce in the next few months.
