Gold Tumbles as Market Mood Shifts—Trump’s Comments Ease Tensions
Tuesday, May 20th 2025
Just a day after smashing records, gold saw a sharp downturn as shifting political signals from Washington reignited investor appetite for risk. By Wednesday afternoon, the precious metal had slid over 3%, a reflection of cooling fears surrounding U.S.-China trade tensions and the future of the Federal Reserve’s leadership.
Market Sentiment Swings Back Toward Risk
Spot gold dipped to $3,281.60 per ounce by 1:43 p.m. ET, marking a steep retreat from Tuesday’s record high of $3,500.05. U.S. gold futures followed suit, settling at $3,294.10, down 3.7% on the day.
The sudden shift in sentiment came after President Donald Trump dialed back on his rhetoric, assuring markets he had no intention of removing Federal Reserve Chairman Jerome Powell. Additionally, Trump hinted at renewed progress on the China tariff front, easing investor fears and breathing new life into equity markets.
Risk-On Mode Returns
According to Phillip Streible, chief market strategist at Blue Line Futures, “Markets are starting to shake off the tariff panic. We’re seeing capital flow out of safe-haven assets like gold and back into risk plays—think Apple, Tesla, and other high-momentum names.”
Indeed, the dollar saw a modest recovery, and Wall Street began to stabilize after several volatile sessions. Trump’s softened stance and a remark from U.S. Treasury Secretary Scott Bessent—who noted that tariffs with China would likely need to be lowered before negotiations could resume—helped restore a sense of direction to the broader market.
Is Gold’s Rally Losing Steam?
Despite its recent pullback, gold remains up more than 26% year-to-date, fueled by central bank buying, global trade tensions, and growing demand from investors seeking shelter from uncertainty.
However, Ole Hansen of Saxo Bank warned of a possible near-term trend reversal. “The spike to $3,500 and subsequent rejection suggests a technical blow-off top. If momentum continues to fade, we could see a deeper correction in the short term,” he wrote in a market note.
Silver Shines as Gold Slides
Interestingly, while gold stumbled, silver jumped 3% to $33.48 an ounce, and platinum added 1.1% to reach $969.10. Palladium, meanwhile, held steady at $935.59, showing some resilience in the face of shifting investor preferences.
Bottom Line: A Temporary Breather or a Turning Point?
The gold market’s pullback may not necessarily signal the end of its bullish trend—but it’s a clear sign that investors are willing to rotate back into risk when political and economic signals turn more constructive. As always, the next move may depend less on the metal itself and more on the next tweet or policy pivot.
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