Gold Retreats from Record Highs as Trump’s Policy Shifts Ease Market Jitters

The price of gold, which had surged to a record $3,500 per ounce earlier in 2025 amid escalating trade tensions and political turmoil, retreated slightly in mid-April as signals of de-escalation between the U.S. and China, coupled with calming remarks from President Donald Trump, reduced short-term market fears.

The Rise to Records: Trump’s Tariffs and Fed Criticism

Gold’s historic rally was fueled by Trump’s aggressive trade policies, including a 145% tariff on Chinese imports, and his persistent criticism of Federal Reserve Chair Jerome Powell. Trump’s accusations that Powell was a “major loser” for resisting interest rate cuts amplified fears of economic instability and inflation. Investors flocked to gold as a safe haven, pushing prices to unprecedented highs.

The World Gold Council noted $21 billion in Q1 2025 inflows into gold ETFs, the second-highest quarterly total on record. Central banks, including those in China and India, also bulked up gold reserves, adding 1,136 tonnes in 2022 alone, as they sought to diversify away from dollar-denominated assets.

The Catalyst for the Decline: De-escalation Signals

The April dip began on April 21, when U.S. Treasury Secretary Scott Bessent indicated that negotiations with China might lead to reduced tariffs. This calmed fears of a full-blown trade war, prompting investors to take profits. Gold fell by $100 from its peak to around $3,400, with the S&P 500 rebounding 1.2% as risk appetite improved.

Trump further eased tensions on April 22 by stating he had “no intention of firing” Powell, despite earlier threats. This clarified his stance on Fed independence, reducing immediate fears of policy chaos.

Data shows a peak of $3,500 on April 9, followed by a drop to $3,400 by April 22.

The Fed’s Role: Balancing Act Amid Turmoil

The Federal Reserve’s cautious stance added to gold’s volatility. While markets priced in 91 basis points of rate cuts by year-end, Powell emphasized the need for “greater clarity” on tariff impacts before acting. This hesitation kept gold attractive as a hedge against inflation risks.

Analysts noted that gold’s retreat was technical as well as fundamental. The Relative Strength Index (RSI) had hit overbought levels above 80, signaling an overdue correction. A sustained close below $3,400 could test support at $3,350, though long-term demand remained robust.

Broader Implications: Central Banks and Inflation

Despite the dip, gold’s 29% year-to-date gain reflected its enduring role as a hedge against systemic risks. Central banks continued to accumulate gold, driven by geopolitical instability and the erosion of confidence in fiat currencies.

The U.S. dollar’s weakness—a 10% decline year-to-date—also supported gold, as a weaker dollar typically boosts demand for dollar-denominated assets like gold.

Conclusion: Gold’s Resilience Amid Policy Crosscurrents

While short-term dips occurred due to de-escalation hopes, gold’s fundamental drivers remain intact. Trade tensions, Fed uncertainty, and central bank demand ensure its status as a critical safe-haven asset.

Key Data Points:
- ETF Inflows: $21 billion in Q1 2025, second-highest quarterly inflow ever.
- Central Bank Demand: 1,136 tonnes added in 2022; projections suggest 2025 could exceed this.
- Fed Rate Cuts: Markets now price in 91 basis points of cuts by end-2025.

The retreat from $3,500 was a correction, not a reversal. As long as Trump’s trade policies and Fed independence remain in flux, gold will retain its premium. Investors are advised to monitor geopolitical developments and technical levels, with $3,450 acting as key resistance and $3,350 as support. The road ahead for gold remains golden—but with potholes.