(Kitco News) - The gold market is holding onto significant gains above $3,000 an ounce, even as broader investor sentiment has improved after President Donald Trump announced a 90-day reprieve on global import tariffs.
Spot gold last traded at $3,082 an ounce, up more than 3% on the day. Meanwhile, the S&P 500 closed Wednesday’s session with a nearly 10% gain. Silver has also attracted some attention as it sees a 4% rally, testing resistance just below $31 an ounce.
According to some analysts, gold remains in a robust uptrend and is expected to see limited selling pressure as some investors will still want to hold safe-haven assets even as sentiment improves.
“These are uncharted waters, and traders will be quick to act as headlines continue to drive sentiment. Against this backdrop, and with the Federal Reserve increasingly cornered as recession fears in the U.S. mount — and now expected to deliver four quarter-point rate cuts — demand for the haven appeal of gold is likely to remain elevated,” said Ricardo Evangelista, Senior Analyst at ActivTrades, in a note.
Although the Trump administration has paused global tariffs for the next 90 days, economists note that the trade war is not over. The government said it would maintain 10% baseline tariffs against nations including Canada, Mexico, and the European Union. The U.S. is also escalating its trade war with China, imposing a 125% duty on imports.
Some analysts note that it will take time to undo all the damage the tariffs have done to global markets. Bill Adams, Chief Economist for Comerica Bank, said in a note that while the S&P 500 has rebounded off its lows, it is still down 8% so far this year.
“Businesses will be relieved that the destination for trade policy looks like it could be less disruptive than seemed possible yesterday. Even so, the huge overhang of policy uncertainty will weigh on investment and weak decisions in the next few months," Adams said in a note. “Also, 125% tariffs on Chinese imports will be a huge problem for many businesses if they stay in place. After the depth of the April tariff shock, trade policy uncertainty will likely be more of a drag to economic growth in 2025 than it was during the first Trump administration.”
Jeffrey Roach, Chief Economist for LPL Financial, said that he expects the economy to continue to struggle.
“Market volatility could remain elevated, despite the 90-day pause on tariffs for non-retaliating countries. Hard data from the early part of the year suggests the economy is slowing, irrespective of trade policy,” he said.
