Gold Challenges $2,200 Support Amid Wall Street Surge; Silver Tumbles

 

Gold Challenges Key Support; Silver Tumbles Amid Heightened Risk Appetite

(Bullion News Network) – Gold prices pulled back again this morning, shedding over $68 per troy ounce after a moderate bounce yesterday. Today’s price action pulled the precious metal below the $3,200 support for the first time since early April. Gold is now down $300, or 8.8%, from its all-time high of $3,500.05. Increased risk appetite on Wall Street is a likely culprit for the pullback. The stock market has surged on news that the U.S. and China have reached a much-anticipated trade deal; the deal will put a pause on retaliatory tariffs for 90 days, bringing the effective U.S. tariff on China down to a combined 30% and bringing U.S. tariffs down to 10%. The stock market is on pace to erase all of its 2025 losses, and CNN’s Fear and Greed Index finds that markets are now heading into “extreme greed” territory.

Of particular note is the index’s safe haven demand reading, which is measured by the difference in returns between stocks and bonds. The reading, +13.13%, is less than one percentage point off from a year-long high. Analysts believe that the market’s tendency toward stocks, which offer a higher risk profile than bonds, suggests a stronger risk appetite and declining safe haven demand from investors. Gold is a safe haven asset, so investors with higher risk appetites are likely to trend away from the precious metal in favor of higher-risk investments like stocks and cryptocurrency. Gold’s weekly price chart seems to corroborate this theory, with the precious metal losing nearly $100/ozt as news of the U.S.-China trade deal broke. Wall Street’s celebration continued today, driving the appeal of safe haven assets even lower as traders bet on a more lasting deal between the world’s two largest economies. 

Silver prices also started Wednesday sharply lower. The precious metal lost over $0.60/ozt, erasing Tuesday’s gains and dropping to the $32.30-40 level. Gold and silver moved in near-lockstep, keeping the gold-silver ratio only marginally changed at 98.57:1. This had previously been a silver-heavy week, with gold’s dramatic fluctuations driving the GSR lower for four consecutive days. Pan American Silver lowered its 2025 price target from $42 to $39 today but maintains that silver will be an “outperformer” during the second half of 2025.

Also creeping into the equation for gold market price action is the growing unlikelihood of a rate cut at the Federal Reserve’s June 18th meeting. CME FedWatch now projects just an 8.4% probability that the FOMC will vote to cut rates in June, down from 21.2% last week and 61.5% one month ago. Another optimistic inflation reading on Tuesday drove stocks higher and rate cut futures lower as traders bet that Powell and the rest of the Fed will take another month to monitor the economic situation before considering easing monetary policy. Interest rate cut speculation played a major role in gold’s historic 2024 run, but a lack of policy movement from the FOMC this year has made geopolitical and economic uncertainty a more significant factor in safe haven asset returns in 2025. 

Markets are also focused on a set of three key ongoing conflicts, each of which has the potential to escalate into a larger regional war. Wars in Ukraine and Gaza have been fixtures of the news cycle throughout 2025, but fresh developments in the longstanding territory feud between India and Pakistan last week injected fresh uncertainty into global financial markets. A US-brokered ceasefire pulled the two nuclear-armed countries back from a conflict that experts say could have pulled several other world powers into the fray. The ceasefire appears to have held for another day, but further escalations could spark more demand for safe haven assets, including gold. 

Next week’s major data point will be the U.S. Leading Economic Indicators report, which is due for release on Monday. For the time being, softened safe haven demand and heightened risk appetite have driven precious metal prices sharply lower during Wall Street’s recovery.