Gold suffers $200 pullback as Trump softens tone on Powell and China
Press Hub UCapital
Share:
Gold prices plummeted over $200 in just two sessions, marking a sharp 5.5% retreat from Monday’s all-time high of $3,500 per ounce. The sudden reversal came as markets rapidly unwound safe-haven positions in response to a shift in rhetoric from President Donald Trump, who backed off his threats to fire Federal Reserve Chair Jerome Powell and suggested tariff levels on China would be reduced significantly. By Wednesday morning, spot gold (XAU/USD) had dropped to $3,308, posting its steepest two-day decline in months.
The retreat underscores how quickly sentiment can pivot when political tail risks ease. Just days earlier, Trump's aggressive posture toward both Powell and U.S.-China trade policy had triggered a surge in demand for gold, viewed as a hedge against central bank instability and global economic fallout. His latest comments — noting “no intention” to remove Powell and promising that proposed tariffs “will come down substantially” — deflated the so-called “panic premium” that had been baked into bullion prices.
Compounding the pressure on gold, a rebound in risk assets and the U.S. dollar created unfavorable cross-currents. Equity futures surged more than 2% ahead of Wednesday’s open, and dollar strength eroded gold’s relative appeal as real yields recovered slightly. Historically, a rising dollar and improved risk appetite tend to sap momentum from precious metals, particularly after an extended bullish run. Still, gold remains one of 2025’s standout performers. Even after this week’s correction, the metal has outperformed the S&P 500 by 45% year-to-date, thanks to a 35% gain in gold prices compared to a 10% drawdown in the equity benchmark. The structural drivers behind gold’s rally — including dollar weakness, macro uncertainty, and record-high global liquidity — remain in place, but near-term price action is likely to be dominated by political news flow and market positioning.
Looking forward, traders should brace for further volatility in gold, especially given the lack of major economic data releases this week. With fundamentals momentarily sidelined, the precious metal’s next move may hinge more on Twitter feeds than Treasury reports. Unless geopolitical risks resurface or the Fed’s policy credibility is shaken anew, bullion could remain vulnerable to profit-taking after a historic run. Key support now lies in the $3,280–$3,300 range, with resistance re-emerging near the $3,400 level if buyers regain confidence.
The retreat underscores how quickly sentiment can pivot when political tail risks ease. Just days earlier, Trump's aggressive posture toward both Powell and U.S.-China trade policy had triggered a surge in demand for gold, viewed as a hedge against central bank instability and global economic fallout. His latest comments — noting “no intention” to remove Powell and promising that proposed tariffs “will come down substantially” — deflated the so-called “panic premium” that had been baked into bullion prices.
Compounding the pressure on gold, a rebound in risk assets and the U.S. dollar created unfavorable cross-currents. Equity futures surged more than 2% ahead of Wednesday’s open, and dollar strength eroded gold’s relative appeal as real yields recovered slightly. Historically, a rising dollar and improved risk appetite tend to sap momentum from precious metals, particularly after an extended bullish run. Still, gold remains one of 2025’s standout performers. Even after this week’s correction, the metal has outperformed the S&P 500 by 45% year-to-date, thanks to a 35% gain in gold prices compared to a 10% drawdown in the equity benchmark. The structural drivers behind gold’s rally — including dollar weakness, macro uncertainty, and record-high global liquidity — remain in place, but near-term price action is likely to be dominated by political news flow and market positioning.
Looking forward, traders should brace for further volatility in gold, especially given the lack of major economic data releases this week. With fundamentals momentarily sidelined, the precious metal’s next move may hinge more on Twitter feeds than Treasury reports. Unless geopolitical risks resurface or the Fed’s policy credibility is shaken anew, bullion could remain vulnerable to profit-taking after a historic run. Key support now lies in the $3,280–$3,300 range, with resistance re-emerging near the $3,400 level if buyers regain confidence.