Gold Price Crashes Amid Market Turmoil

Gold prices took a sharp downturn on Friday, breaking below the $3,300 level. Despite falling U.S. Treasury yields and a slight weakening of the Dollar Index, gold was unable to sustain its previous gains. Market sentiment turned sour following comments from former President Donald Trump regarding the continuation of tariffs on China without significant concessions. Now, all eyes are on next week’s key economic data releases from the U.S. In this article, we will examine the reasons behind the sharp drop in gold prices below $3,300.

Gold Under Pressure: Strong Dollar, Falling Yields

Gold prices declined by more than 1.60%, trading around $3,294. Although the yield on the U.S. 10-year Treasury note fell by about five basis points, the U.S. dollar remained firm, preventing gold from making any meaningful recovery. Additionally, ahead of the weekend, many traders decided to lock in profits, which further intensified selling pressure in the precious metals market.

Growing Market Anxiety After Trump’s Comments and Weak Consumer Sentiment

Initial optimism sparked by news that China may exempt some U.S. goods from tariffs was quickly overshadowed. Trump’s firm stance on maintaining tariffs unless concessions are granted reignited fears of prolonged trade tensions. At the same time, the University of Michigan’s Consumer Sentiment Index fell to its lowest level since the late 1970s, while short-term inflation expectations surged to 6.5%. These developments added to the overall risk-off sentiment across financial markets.

Focus Shifts to Key U.S. Economic Data

Looking ahead, traders are closely monitoring the upcoming release of several critical U.S. economic indicators, including the March JOLTS report, the first estimate of Q1 2025 Gross Domestic Product (GDP), the ISM Manufacturing PMI, and April’s Nonfarm Payrolls (NFP) report. Although the Federal Reserve is expected to keep interest rates unchanged at its next meeting, the market is still pricing in a potential rate cut later this year, reflecting persistent economic uncertainty.