Spot gold traded at $3,244.30 on Tuesday, posting a modest 0.23% gain. This stability comes despite a 3% drop on Monday following improved U.S.-China trade relations. Analysts note the dollar’s slight retreat from Monday’s highs provided some relief, with the dollar index falling 0.43% to 101.43 after surpassing the 100-point threshold on trade optimism.
Trade Policy Shifts Create Volatility
Market observers point to recent trade policy developments as key drivers of gold’s price action. The metal initially declined following President Trump’s “Liberation Day” announcement of sweeping tariffs, only to rebound when those measures were later replaced with a blanket 10% import tax. The latest adjustment—reducing Chinese tariffs to 30%—has created additional market turbulence.
TD Securities analysts noted in a Tuesday report: “While gold reacted negatively to improved U.S.-China relations, we expect the metal to remain well supported given ongoing macroeconomic uncertainties.” This view reflects gold’s dual nature as both a risk-sensitive asset and a haven during periods of instability.
Changing Composition of Gold Demand
Investment demand continues to underpin the gold market, with Western institutional investors making strategic allocations to gold-backed ETFs. Notably, Asian demand—particularly from Chinese investors—has become increasingly influential.
“Chinese gold ETF inflows continue gathering steam, attracting the largest inflows since April 24th despite the U.S.-China trade developments,” TD Securities analysts observed. “This changing buyer composition suggests limited downside potential for prices.”
The analysts highlighted a broader macroeconomic shift, noting: “While the U.S. dollar isn’t losing its reserve currency status, it’s partly losing its store-of-value function—a development that benefits gold.”
Speculative Positioning Remains Cautious
While Commodity Trading Advisors (CTAs) maintain long positions in gold, their speculative activity has plateaued. According to TD Securities, these traders appear unwilling to exit positions unless prices suffer a severe breakdown toward $3,050 per ounce.
This cautious stance among professional traders reflects gold’s unique position in today’s markets—caught between improving risk sentiment and persistent structural concerns about global growth, currency stability, and geopolitical tensions.
Conclusion
Gold’s ability to hold critical support levels despite fading bullish momentum speaks to its enduring appeal as a portfolio diversifier. As trade policies evolve and macroeconomic uncertainties persist, the precious metal appears likely to maintain its relevance—even if it struggles to retest recent highs in the near term. The changing dynamics of gold demand, particularly the growing influence of Asian investors, may help cushion against significant downside moves while creating a more stable long-term foundation for prices
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