Gold prices saw a decline on Wednesday, April 23, following a surge to all-time highs. This shift in market sentiment was influenced by comments from U.S. President Donald Trump, who adopted a more lenient stance toward the Federal Reserve, alongside growing optimism over a potential trade deal with China.
By 0256 GMT, spot gold had dropped 0.7% to $3,357.11 per ounce, while U.S. gold futures fell 1.5%, trading at $3,366.80 per ounce.
In India, gold prices also experienced a decline. According to Goodreturns, 24K gold was priced at ₹10,136 per gram, while 22K gold was valued at ₹9,291 per gram. The price for 18K gold stood at ₹7,602 per gram.
Reasons Behind the Gold Price Drop
The shift in gold’s direction can be attributed to several factors. President Trump eased off his previous threats to remove Federal Reserve Chairman Jerome Powell, which, combined with his comments about a potential trade deal with China that could significantly reduce tariffs, contributed to improved investor sentiment.
Kelvin Wong, Senior Market Analyst at OANDA, explained that these remarks led to a sell-off in the gold market. “The change in tone triggered a sell-off. Gold hit oversold levels in the short term,” Wong noted.
Additionally, a stronger U.S. dollar and rising U.S. stock prices put downward pressure on gold. A stronger dollar makes gold more expensive for foreign buyers, further dampening demand.
U.S. Treasury Secretary Scott Bessent fueled optimism, predicting a gradual easing of trade tensions, although he cautioned that discussions with Beijing would be slow. Meanwhile, Russian President Vladimir Putin’s indication of a potential halt to the Ukraine war also reduced demand for gold as a safe-haven asset.
Gold’s Shift from Record Highs to Pullback
Gold had reached a high of $3,500 per ounce on Tuesday, April 22, marking its 28th record high this year. The surge in prices was driven by inflation concerns, central bank purchases, and global geopolitical tensions.
Despite the recent pullback, JPMorgan remains bullish on gold. The investment bank projects prices could surpass $4,000 per ounce by next year. However, analysts caution that short-term corrections are likely.
“Gold saw a huge rally, and some profit-taking is natural now,” said Manav Modi, Senior Analyst at Motilal Oswal.
Gold may find renewed support from global economic trends. The International Monetary Fund (IMF) recently downgraded its global growth forecast for 2025 to 2.8%, while raising inflation expectations to 3%.
How Should Investors Proceed?
With both gold and the Nifty 50 index at record highs, investors have seen strong returns across assets. However, experts urge caution moving forward.
Om Ghawalkar, Market Analyst at Share.Market, recommends a balanced approach. “If gold constitutes more than 25% of your portfolio, it may be wise to book some profits. Avoid lump-sum investments at this point. Instead, consider systematic investment plans (SIPs) in gold ETFs to manage volatility,” Ghawalkar advised.
He also emphasized the importance of diversification. “Spread your investments across gold, stocks, and debt. Don’t let market hype alter your strategy,” he concluded.
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