Spot gold falls below $3,290 per ounce, down 0.9% intraday

Spot gold falls below $3,290 per ounce, down 0.9% intraday

April 28, 2025 - Spot gold prices experienced a significant drop, falling below $3,290 per ounce, marking a 0.9% intraday decline. This movement was primarily driven by a combination of factors including easing trade tensions between the United States and China, a strengthening dollar, and improved risk appetite in the broader market.

Trade Tensions Easing with China

Easing trade tensions between the United States and China contributed to the decline in gold prices. Bloomberg reported that China was considering exempting select U.S. imports from its 125% tariffs, signaling a potential de-escalation in the conflict. This development reduced demand for safe-haven assets like gold, as investors shifted their capital towards riskier equities and industrial commodities like crude oil [1].

Strengthening Dollar Impact

The US dollar index climbed to 99.62, its highest level in three weeks, exerting significant pressure on dollar-denominated metals. A 1% appreciation in the dollar typically correlates with a 0.7% decline in gold futures, according to models from the Federal Reserve Bank of New York. This relationship held true on Friday, amplifying selling pressure across precious metals markets [1].

Friday Profit-Taking Patterns

Friday's session saw accelerated liquidations, with gold prices falling as traders locked in profits ahead of the weekend. This aligns with historical patterns showing higher volatility in precious metals during Friday sessions compared to other weekdays. Silver, for instance, surrendered 52 cents (-1.57%) after rallying 3% earlier in the week, highlighting the impact of profit-taking [1].

Current Gold and Silver Price Analysis

Today's Gold Price Movement

Gold reached an intraday low of $3,264.20 before recovering to $3,370, marking a 1.26% decline. The $3,500 psychological resistance held firm despite brief tests earlier this week. Late-session buying at the 50-day moving average ($3,290) prevented further declines, suggesting strong institutional support at this technical level [1].

Today's Silver Price Movement

Silver breached the $33 support level temporarily, hitting $32.72 before closing at $33.12. The metal's 14-day Relative Strength Index (RSI) cooled from 68 to 59, reducing overbought conditions while maintaining upward momentum. Physical demand remains robust, with the US Mint reporting a 17% month-over-month increase in American Eagle sales [1].

Gold-to-Silver Ratio

The gold-to-silver ratio expanded to 100:1, highlighting silver's underperformance relative to gold. This divergence presents arbitrage opportunities, as the 20-year average ratio stands at 68:1. Historically, ratios above 90:1 have preceded silver outperformance, with the metal gaining 42% on average in the subsequent 12 months post-ratio peaks [1].

Industrial Metals Showing Strength

Copper futures rose 2.1% to $4.58/lb, while nickel gained 1.9%. These movements reflect improved manufacturing PMI data from China, signaling renewed industrial demand. The base metals rally contrasts with precious metals' slump, illustrating differentiated responses to trade developments [1].

Energy Markets

Brent crude oil climbed 1.8% to $89.50/barrel as eased trade tensions boosted global growth expectations. The energy-gold correlation turned negative, underscoring gold's unique safe-haven dynamics [1].

Analyst Perspectives

TD Securities' Daniel Ghali emphasized that today's correction lacks the hallmark of structural liquidations, with ETF holdings unchanged and futures open interest rising 4%. This dip represents entry points for strategic buyers [1].

Support Levels to Watch

For silver, maintaining closes above $33 remains critical—a level that saw 12.5 million ounces traded in today's session. Gold's $3,300 level held firm despite pressure, with the CME Group reporting $280 million in buy orders clustered at this price point [1].

Geopolitical Considerations

Despite easing US-China tensions, the Ukraine conflict persists as a risk factor. Russian troop movements near Kharkiv and potential NATO responses keep defensive allocations in play. Gold's volatility index remains elevated at 18.7, compared to 12.4 for the S&P 500 [1].

Monetary Policy Implications

Speculation mounts about Federal Reserve rate cuts, with Fed Funds futures pricing a 38% probability of a September reduction. Former White House advisor Kevin Hassett notes that the administration's pressure for cheaper credit could force Powell's hand, recreating 2019's pre-emptive cut scenario [1].

Buying Opportunity Assessment

The gold/silver ratio's extreme favors silver accumulation, with historical mean reversion strategies showing 22% annualized returns in similar conditions. Physical dealers like Summit Metals report 35% higher bullion sales today compared to last Friday, particularly in fractionals [1].

Weekend Trading Strategy

With Asian markets reopening Sunday at 6 PM ET, focus shifts to Shanghai Gold Exchange premiums. Current $8/oz premiums over spot suggest strong Eastern demand may counter Western selling pressure. Summer seasonality patterns caution patience—June typically sees 1.2% average gold declines versus 2.4% Q4 gains [1].

References:

[1] https://discoveryalert.com.au/news/precious-metals-price-drop-2025-gold-silver-ratio/
[2] https://www.investing.com/news/commodities-news/gold-prices-dip-as-risk-appetite-improves-amid-uschina-deescalation-hopes-4003841