Despite uncertainty surrounding U.S. tariffs scheduled for April 2, which has been beneficial for the safe-haven commodity, analysts cautioned that gold prices may soon face a reversal. Gold prices enjoyed another strong gain Monday, continuing their run to new highs.
According to market expert Fawad Razaqzada of City Index and FOREX.com, prices that are currently significantly higher than $3,000 per ounce could lead to some profit-taking. “While dip buyers are lurking, a rug pull is becoming increasingly likely at these levels.”
“A rug pull is becoming more likely at these levels, even though dip buyers are still out there.” FOREX.com, City Index, and Fawad Razaqzada
The most active June gold contract on Comex rose $36, or 1.2%, on Monday, closing at a new high of $3,150.30 an ounce. According to Dow Jones Market Data, prices increased 10.6% for the month and 19.3% for the quarter. According to data dating back to 1975, the quarter’s rise was the biggest ever.
As a result of the stock market downturn and the “resulting reintroduction of the fear premium,” gold prices have been rising, according to GraniteShares CEO Will Rhind. “Gold is establishing itself as the defector hedge against the U.S. dollar.”
However, Rhind told MarketWatch Monday that there might be a decline in gold prices as reciprocal tariffs went into force on Wednesday. The day might turn into a “buy the news event” for equities, which might offer some much-needed support for riskier assets.
Monday saw erratic trading on U.S. benchmark stock indices, which were expected to close the quarter generally lower.
According to Razaqzada, people also “tend to liquidate their profitable long gold positions to free up margin” when their risk appetite becomes “sour” and U.S. stocks begin to decline.
A break below current price support around the $3,057 to $3,066 level might be a “short-term trigger,” he told MarketWatch late last week, suggesting that long gold positions may need to be liquidated. In the long run, he suggested, a fall below $3,000 might be necessary to start a more significant decline.
