(Kitco News) – The gold price is continuing to rise on trade tariff fears, and it could gain more if the Fed is forced to cut despite high inflation, while silver continues to underperform and U.S. solar imports may weaken it further, according to precious metals analysts at Heraeus.
In their latest precious metals update, the analysts noted that Trump’s on-again, off-again tariff announcements were whipsawing financial markets and the gold price.
“With the imposition of reciprocal tariffs being rapidly followed by a 90-day delay (except for China which had responded with its own tariffs on US goods), stock markets staged a relief rally on Wednesday and the gold price rebounded, hitting a new record high and pushing above $3,200/oz on Friday,” they noted.
“US inflation eased to 2.4% year-on-year in March but the expectation is that tariffs will be inflationary in the US. Federal Reserve Chairman Jay Powell said on 4 April that the tariffs were higher than expected and the economic impacts would also likely be greater, including higher inflation and slower growth,” the analysts said. “This appears to put the Fed in a difficult position, wanting to squash inflation but support growth. However, in the past when the economy has weakened the Fed has resorted to rate cuts irrespective of the level of inflation.”
Heraeus also noted that Barrick Gold is moving ahead on the massive Reko Diq project, which is scheduled to start production in 2028. Reko Diq is “one of the largest undeveloped copper/gold projects in the world with 2.9 billion tonnes of reserves grading 0.28 g/t of gold, equivalent to 26 moz,” they said. “The first phase is aimed at an annual yield of 297 koz of gold, with the second phase lifting that to an average of 520 koz p.a.”
Gold prices are testing near-term support at $3,200 on Monday morning after hitting a new all-time high of $3,245.84 overnight.
Spot gold last traded at $3,200.21 per ounce for a loss of 1.16% on the session.
Turning to silver, Heraeus analysts noted that solar cell exporters to the United States received a reprieve after Trump delayed the implementation of reciprocal tariffs, but the uncertainty continues to weaken demand.
“Tariffs on solar cell and solar panel imports into the US would have significantly impacted the industry and hit silver demand, as much higher costs of imports reduced demand,” they said. “Now the uncertainty over tariffs is set to last for another 90 days and potentially longer.”
They noted that after the previous round of U.S. import tariffs on Chinese solar producers, manufacturing moved from China to other Asian countries, but those countries now also face tariffs and possible anti-dumping duties.
“The US imported 54.3 GW of solar panels in 2024, with the majority coming from Vietnam (19.3 GW), Thailand (12.9 GW) and Malaysia (7.6 GW) (source: US ITC), all of which could have significant reciprocal tariffs applied to them of 46%, 36% and 24%, respectively,” they said. “Production in the US could be ramped up but that may take some time. Although module manufacturing capacity has been increased, upstream capacity is limited to 2 GW of crystalline silicon cell manufacturing, so many components would still need to be imported.”
The analysts said that solar 19% of total silver demand in 2024. “Total global solar installations were 452 GW in 2024 (source: IRENA) with the US responsible for over 10%, so a drop in demand in the US would be noticeable,” they noted.
In terms of the price action, Heraeus also pointed out that while gold has moved to new highs, silver has once again failed to follow suit.
“Following the sharp sell-off silver also rebounded strongly but the gold:silver ratio has jumped above 100,” they noted. “The last time this happened was during the Covid sell-off in March 2020.”
“Economic uncertainty remains high and, with higher tariffs possibly being reinstated in a little under 90 days, silver’s industrial aspect may continue to hold it back,” they concluded.
Silver has dipped below $32 per ounce several times on Monday morning after multiple failures to break above $32.400 earlier.
At the time of writing, spot silver last traded at $32.101 per ounce and is down 0.63% on the daily chart.
