Gold (XAU) Plunges 1.50% as Trump's Tariff Plan Shakes Global Markets

The precious metal (XAU/USD) retreats from record highs, falling below $3,100 as markets digest the impact of newly announced reciprocal tariffs by the U.S. administration.

XAU Price Tumbles Amid Global Market Reaction to Tariff Announcement

Gold (XAU/USD) experienced significant downward pressure on Thursday, dropping over 1.50% to trade around $3,095 at the time of writing. The precious metal retreated as traders locked in profits, pushing the bullion price below critical support levels. The selling activity coincides with market-wide adjustments following U.S. President Donald Trump's announcement of his reciprocal tariff plan, which has sent shockwaves through global financial markets.

Investors continue to process the implications of the new tariff structure, which establishes a minimum 10% base tariff on all imports entering the United States regardless of origin. This policy maintains previously established levies, resulting in countries like China facing a substantial 54% total tariff effective immediately. The announcement has triggered classic safe-haven flows, with global equity markets experiencing percentage drops, bond yields falling as demand increases, and the U.S. Dollar (USD) weakening against major currencies.

Gold Producers Rise Despite Equity Selloff as Safe Haven Demand Persists

Despite the correction in gold prices, Bloomberg reports that Asian gold producers have seen their stocks rise after the precious metal reached record highs earlier this week. This movement stands in contrast to the broader selloff in global equities, highlighting gold's continued appeal as a haven asset amid fears of economic slowdown triggered by President Trump's "reciprocal" tariffs.

The market is also calibrating expectations regarding Federal Reserve monetary policy. According to the CME FedWatch tool, the probability of an interest rate cut in May stands at 21.5%, while June remains the most likely timing for a rate reduction with only a 27.5% chance of rates remaining unchanged. However, shifts in the yield curve suggest investors are beginning to price in a potentially longer pause in the Fed's easing cycle.

XAU Among Metals Exempt from New Tariff Structure

In a notable development for gold and other metals markets, the White House fact sheet reveals that steel, aluminum, gold, and copper imports will not be subject to the new reciprocal tariffs. This exemption provides some relief to domestic buyers who are already managing the cost impact of existing 25% tariffs under Section 232 of the Trade Act of 1962 on various key metal imports, as reported by Reuters.

Following the tariff announcement, Treasury Secretary Scott Bessent commented that these measures could be quickly lifted or removed if countries relocate their production facilities to the United States. This statement suggests a potential negotiation strategy behind the tariff implementation, offering a pathway for affected nations to mitigate the impact through investment in U.S. manufacturing.

Gold Technical Analysis Points to Continued Volatility

Thursday's gold price movement represents a logical market reaction as investors process the implementation of reciprocal tariffs by the Trump administration. The current scenario appears to follow the classic "buy the rumor, sell the fact" pattern that financial analysts at FXStreet had anticipated in previous market analyses. As negotiations commence and potential deals emerge between the U.S. and other countries to navigate around the tariff structure, market sentiment may improve, potentially leading to further softening in gold prices.

However, should trading partners respond with retaliatory tariffs, gold could resume its upward trajectory, potentially establishing fresh all-time highs in the coming sessions.

XAU Price Targets: Key Resistance and Support Levels to Watch

From a technical perspective, gold bulls need to reclaim the daily R1 resistance at $3,149 as their first objective, followed by the recent all-time high of $3,167, which roughly aligns with the R2 resistance at $3,165. Should momentum build beyond these levels, the psychological $3,200 mark becomes the next significant target.

On the downside, immediate support lies at the S1 level of $3,111, which if tested would still preserve most of this week's gains. From a technical standpoint, maintaining price action above this week's low remains crucial for the bullish case. Should selling pressure intensify, the S2 support at $3,089 represents a critical buffer zone to prevent gold from retreating below the psychologically important $3,000 threshold.

The current market dynamics suggest that XAU/USD will likely experience heightened volatility in the coming sessions as global markets continue to adjust to the new tariff landscape and assess its broader economic implications.