Gold Down, Silver Up As Tariff Market Rout Continues

 

Gold Down, Silver Up As Tariff-Sparked Market Rout Continues

(Bullion News Network) – Gold prices fell for a third consecutive day to open the trading week on Monday. The price of gold per ounce dropped nearly $60, driving the precious metal below $3,000 per troy ounce for the first time since March 14th. Markets are still reeling from last week’s “Liberation Day” tariff announcement by U.S. President Donald Trump. Experts say the new trade policy, which went into effect on Saturday, is the largest tariff hike since 1909. Investors are herding toward the U.S. dollar amid uncertainty, triggering what is very likely a combination of a selloff and profit-taking in the precious metals market. Over the course of three days, gold has lost over $130 and dropped to a 3.5-week low. 

Silver managed to snap a two-day losing streak today, decoupling from gold and gaining over $0.50 per troy ounce. The lopsided price action pulled the gold-silver ratio down three points. Last Friday, the GSR peaked at 102.64:1, the highest gold-silver ratio since the COVID-19 global market rout in 2020. Even after today’s price movement, the gold-silver ratio is at over a four-year high. Other precious metals moved minimally, with platinum lagging behind palladium at $930.70 to palladium’s $948.26 per troy ounce. It remains to be seen how the White House’s tariffs will impact the value of platinum group metals, which are used in the production of catalytic converters and other vehicle parts. 

Wall Street continued to slide but offered a more volatile session to open this trading week. Markets briefly rallied this morning as a rumor circulated that the Trump administration was considering putting a pause on the new tariffs. An statement from the White House labeled these rumors as “fake news,” sending stocks tumbling again as investors fretted over the possibility of a global recession. Despite a busy day of rumors and corrections, Wall Street managed to etch out only modest losses on Monday. The S&P 500 ended the day down 0.23%, while the Dow dropped another 0.91%. The tech-heavy Nasdaq Composite managed a marginal gain (0.099%), ending its two-day losing streak but sliding a total of 14.25% on the month. 

President Trump also injected some more uncertainty into markets today, vowing on Truth Social to raise the U.S. tariffs on China by an additional 50% if the country fails to remove its retaliatory 34% tariff by Tuesday, April 8th. The move has bolstered traders’ fears that the United States could be heading toward a costly trade war with China. The Chinese government has not yet commented on President Trump’s threats, but Wall Street certainly took notice, with the morning’s gains quickly retreating as the U.S. leader doubled down on his tariff plans. 

Meanwhile, traders are increasingly betting that the Federal Reserve will preemptively cut interest rates in response to the tariff-induced market panic. CME FedWatch now anticipates an implied probability of 33% that the FOMC will vote to cut rates by 25 basis points at its next meeting in May. This is up from 14% last week. Markets also believe that the Fed may cut rates up to four times in 2025, as opposed to the two-cut projection that opened the year. FedWatch projects a 37% probability that the target rate for the Federal Reserve will be 3.25-3.50% by December of this year, up from 23.8% one week ago and 20.2% last month. Last year, interest rate cut speculation drove much of gold’s historic bull run, pushing the metal past several all-time highs leading up to meetings. 

On Wednesday, the Federal Reserve will release minutes from its March meeting. These minutes could potentially give investors more insight into the Fed’s outlook heading into Q2 2025. On Friday, traders will be able to review initial jobless claims, as well as Consumer Price Index (CPI) data for the month of March. Analysts anticipate the index to shrink from 2.8% in February to 2.6% last month. The core CPI, considered one of the most reliable indicators of inflation in the U.S., is expected to remain unchanged at 0.2%, while the core CPI year-over-year is forecasted to drop by 0.1% from 3.1% to 3.0%. Producers Price Index (PPI) readings scheduled for release on Friday are expected to be less optimistic, with a median forecasted increase of 0.2% to the PPI and a 0.1% increase projected for the core PPI. 

These economic data reports should shed some more light on the economic situation as traders anxiously await more news from the Federal Reserve in May.