Gold Prices Decline as Markets React to Trump’s Tariff Announcement

Gold prices (XAU/USD) came under pressure on Thursday, falling over 1.25% to approximately $3,095 as of the latest update. The decline was driven by profit-taking activity, pushing the precious metal below key technical levels. The market reacted to an unexpected announcement by former U.S. President Donald Trump, who introduced a global “reciprocal” tariff plan, triggering volatility across asset classes.

Trump’s proposal sets a minimum 10% base tariff on all imports into the United States from any country, with previous tariffs remaining in place. As a result, total tariffs on Chinese imports have surged to 54%, effective from Thursday. This policy shift caused shockwaves in global markets — equities saw steep declines, bond yields dropped as demand for bonds increased, and the U.S. Dollar weakened against other major currencies.

Market Reactions and Economic Indicators

As reported by Bloomberg, gold mining companies in Asia benefited from the surge in demand for safe-haven assets, driven by concerns over a potential global economic slowdown. This gain occurred despite widespread losses in global equity markets.

Interest rate expectations also shifted. According to the CME FedWatch tool, there’s a 21.5% chance of a Federal Reserve rate cut in May, while a June rate reduction is seen as the most likely outcome, with only a 27.5% probability that rates will remain unchanged.

A White House fact sheet clarified that imports of metals like steel, aluminum, copper, and gold would not be included in the new reciprocal tariff plan. These metals are already subject to a 25% tariff under Section 232 of the Trade Act of 1962. As noted by Reuters, this provides some relief to U.S. buyers, especially domestic manufacturers. U.S. Treasury Secretary Scott Bessent commented that the tariffs could be lifted swiftly if other countries shift their production back to the United States.

Technical Outlook: Support and Resistance Levels

Thursday’s market behavior appears to reflect a “buy the rumor, sell the fact” pattern, with prices adjusting as the anticipated policy was officially confirmed. Should negotiations between the U.S. and affected countries begin, it could help stabilize gold prices or even result in further corrections.

However, any retaliatory trade measures from other nations could reignite fears and drive gold toward new all-time highs.

In terms of technical analysis, resistance levels include R1 at $3,149 and the recent peak at $3,167, aligning with R2 at $3,165. A broader bullish target lies near the $3,200 level.

Support levels to watch are S1 at $3,111 and S2 at $3,089. Maintaining support above these points is critical to prevent a slip below the psychological $3,000 level.

Source: Adapted from FXStreet – “Gold price falls as markets reposition on Trump’s tariffs – the highest in over 100 years”, published April 3, 2025.