Spot gold drops nearly 1% to $3,010 an ounce

April 08, 2025 (MLN): Spot gold was down 0.8% at $3,010.65 an ounce as of [12:09 pm] PST on Tuesday, according to data reported by Mettis Global.

However, gold prices are now rebounding from a nearly four-week low reached in the previous session, as heightened concerns over the global trade war between the United States and its key trading partners have boosted investor appetite for safe-haven assets.

U.S. gold futures gained 1.3% to $3,010.70.

Gold's latest gallop to all-time highs has drawn comparisons with the last time political and economic turmoil were the main drivers of record prices, back in 1980.

But market players say the nature of this rally - and potentially its ability to endure - looks different. 

With tensions running high between historic allies over U.S. tariffs, global trade, and wars in Ukraine and the Middle East, big powers look unlikely to pull together swiftly this time.

Analysts say this situation is driving increased interest in bullion as a haven from risk, as per Reuters.

The metal's surge above $3,000 an ounce has been driven most recently by U.S. President Donald Trump's new round of tariffs on trading partners.

This marks the first time in a long time that geopolitics and economic uncertainty have served as the top factors moving the gold market.

HSBC analyst James Steel said this is the first time in a long time that geopolitics and economic uncertainty have played a major role in influencing the gold market.

Spot gold hit a record $3,167.57 per troy ounce last week and is up 16% so far this year, on top of 27% growth in 2024.

While the market's trajectory won't be linear, analysts say gold's entry into uncharted territory looks more sustainable than the one seen 45 years ago.

As the precious metal has an inverse correlation with trade flows, analysts said Trump's stance on tariffs has driven new investors into gold, Reuters further added.

This was further fueled by fear of an all-out trade war, especially after Wednesday's announcement of Washington's steepest trade barriers in more than 100 years.

The dollar is also typically known to be a safe-haven asset, but there are some signs of the erosion of its status as uncertainty over tariffs intensifies.

More broadly, since taking office 2-1/2 months ago, Trump has upended the world order, signalling the U.S. may no longer guarantee Europe's security as Washington has since World War Two, and radically shifting the U.S. approach to war in Ukraine.

He also mooted a possible U.S. annexation of Greenland.

The issues driving gold 45 years ago - most notably the Iranian Revolution and the oil crisis - were remedied relatively quickly, leading gold to decline, HSBC's Steel said.

"But the breakdown in international cooperation in the last few years has led to gold staying permanently high," he said.

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