Gold prices surged more than 1% on Thursday, driven by bargain hunting, just a day after the precious metal hit a one-week low amid optimism surrounding the U.S.-China trade talks.
As of 06:34 GMT, spot gold rose 1.1% to $3,323.21 an ounce, while U.S. gold futures climbed 1.1% to $3,330.20. The metal, which has traditionally been seen as a hedge against global instability, reached a record high of $3,500.05 on Tuesday but fell below the $3,300 mark on Wednesday.
Investor Sentiment Boosted by Bargain Buying
Kyle Rodda, a financial market analyst at Capital, explained that the recent volatility in gold prices was largely driven by technical factors and headline risks. However, he emphasized that the fundamentals remain strong, with investors taking advantage of the dip as a long-term buying opportunity. “The kind of volatility we’re seeing this week is being driven by technicals and headline risk. But the fundamentals are strong, so dip buying is effectively a function of investors moving in on the basis of the bigger picture,” Rodda said.
US-China Tariff Concerns and Policy Shifts
On Wednesday, U.S. Treasury Secretary Scott Bessent stated that the current tariffs between the U.S. and China are unsustainable and need to be reduced for trade talks to progress. However, Bessent added that President Donald Trump would not unilaterally cut tariffs on Chinese imports.
Additionally, reports suggest that Trump plans to exempt carmakers from some tariffs following intense lobbying from industry executives. “We sustain an uptrend until the Trump administration really backs away from its trade policy,” Rodda commented.
IMF Warns of Global Economic Impact from Tariffs
The International Monetary Fund (IMF) also weighed in on the ongoing trade disputes, warning that tariffs would slow global economic growth and increase debt levels worldwide. According to the IMF, U.S. economic growth is now expected to fall to 1.8%, down from the January forecast of 2.7%, if the Trump administration’s trade policies are fully implemented.
Impact on the Dollar and Precious Metals
The dollar index (.DXY) fell 0.2% against its peers, making dollar-priced gold cheaper for overseas buyers. Meanwhile, other precious metals saw mixed performance, with spot silver dropping 0.8% to $33.29 an ounce, platinum declining 0.1% to $972.26, and palladium remaining steady at $943.20.
Despite the uncertainty surrounding trade negotiations, gold’s role as a safe-haven asset remains intact, with investors continuing to turn to the metal in times of market volatility and geopolitical risk.
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