Gold, Silver Jump As Trump Tariff Jitters Return

 

Precious Metals Suffer Worst Drop in Months Amid Tariff Turmoil

(Bullion News Network) – Gold and silver are both off to strong starts this week. The price of gold jumped by nearly $100 per troy ounce on Monday, recovering nearly all of last week’s losses in a high-volume trading day. Silver prices also increased to begin the first full week of May, with the spot price of silver climbing $0.50/ozt to make a dent in last week’s slide. Gold outpaced silver today, driving the gold-silver ratio 1.54 points higher to 102.53:1. Both price bumps followed a weekend of more tariff and trade war talks from the White House. President Trump suggested yesterday that the United States is not willing to reduce tariffs in order to spur negotiations between the U.S. and China, setting the stage for further escalations in the ongoing trade war between the world’s two largest economies.

Last month, markets surged when U.S. President Donald Trump suggested that a deal between China and the United States may be on the way. China denied the American leader’s claims that he and Chinese President Xi Jinping had negotiated over the phone. Over the weekend, Trump suggested to NBC reporters that at least some of the historic new tariffs on China may become permanent. Economists say these tariffs, which amount to 145%, could raise prices for both manufacturers and consumers. Since Trump took office on January 20th, markets have fluctuated wildly as the administration introduced its slate of economic policy reforms, including a historic range of new tariffs on the United States’ trade allies. Although Trump did concede on Sunday that he will “have to lower [the tariffs]” eventually, the lack of clarity on the future of the US-China trade war has ratcheted up the uncertainty in American markets.

The Dow, Nasdaq, and S&P 500 slid this morning as traders grappled with the possibility that Trump’s tariffs on China may be here to stay. Nasdaq, comprised of some of the country’s strongest technology stocks, was hardest hit with a drop of nearly 0.8%. Despite the pullback, CNN’s Fear and Greed Index finds that markets are being motivated by ‘greed’ for the first time since December of last year. Particularly relevant to the precious metals market is the index’s safe haven demand projection. This metric measures the difference between 20-day stock and bond returns. The reading pulled back from yesterday’s peak at above 13% but is still at its highest point since May of last year. A strong ratio of stock returns to bond returns typically suggests diminishing safe haven demand.

Next in focus is the Federal Reserve’s meeting, which is scheduled for Wednesday. A rate cut at that meeting is highly unlikely. CME FedWatch finds an implied probability of 2.7% that the FOMC will vote to cut rates by 25 basis points this week, down from 2.8% yesterday, 7.1% last week, and 33.3% one month ago. A resilient labor market and slowing inflation numbers in the face of tariff uncertainty may convince the Fed to keep rates elevated for another meeting, according to analysts. Last month, Federal Reserve Chair Jerome Powell told reporters that the White House’s tariff plans could delay or alter the central bank’s plans to gradually lower rates. While analysts say an interest rate cut on Wednesday is highly unlikely, Powell’s post-meeting press conference could give traders more insight into the U.S. economic situation.

On Thursday, initial jobless claims, U.S. productivity, and wholesale inventory reports are due. Friday will feature a series of speeches from central Federal Reserve bank leaders across the country. The precious metals market was heavily impacted by rate cut speculation in 2024. Given the lack of rate cuts so far in 2025, central bank policy speculation has taken a backseat to tariff uncertainties, which have driven gold to several all-time highs since President Trump’s inauguration in January. If Powell or other Fed leaders imply that monetary policy may soon loosen, prices in the precious metals market could move quickly.

Gold is set to end the day up by over $93/ozt. Silver prices dropped by over $0.50 per troy ounce to begin the week. The gold-silver ratio is up on the day and will close at 102.37:1.