Instead of gaining from global uncertainty, gold has shed more than 3% in recent sessions, slipping below the $3,000 mark briefly. “Demand destruction and recession risk now take centre stage,” JPMorgan Chase analysts noted in a recent commentary, as they acknowledged that some metals-related tariffs were “net positive on the margin.”
So, why is gold falling now?
Gold’s rally over the past year was built on economic anxieties, inflation concerns, and aggressive central bank positioning.
But the recent sell-off signals a change.
Analysts say that institutional investors may be liquidating bullion to raise cash or cover margin calls in other asset classes suffering steep losses.
“There’s a lot of confusion and uncertainties in the markets… safe-haven flows are offering some cushion amid the market volatility,” said Yeap Jun Rong, Market Strategist at IG, while acknowledging that profit-taking could also explain short-term weakness.
Global equity markets lost nearly $6 trillion in value last week, and Japan’s Nikkei tumbled nearly 9% early Monday (April 7).
US President Donald Trump’s surprise tariff hike and China’s 34% counter-tariff triggered panic across asset classes, including commodities.
China also imposed export restrictions on rare earth metals, intensifying the risk-off mood.
Yet, rather than surge, gold dipped — suggesting that investors may be anticipating a broader correction across asset classes, including those traditionally viewed as safe.
Goldman Sachs has raised its forecast for US Federal Reserve rate cuts to 130 basis points in 2025, up from an earlier projection of 105 bps, citing the growing economic drag from the trade war.
While Fed Chair Jerome Powell has said the central bank is “in no hurry” to cut, market expectations tell a different story.
Traders are pricing in a 54% chance of a rate cut as early as May.
Morningstar predicts 38% crash in gold prices
Adding to the bearish outlook, John Mills, a strategist at US-based Morningstar, has forecasted that gold could fall to $1,820 per ounce from current levels above $3,000 — a 38% drop over the next few years.
“Gold’s recent rally was driven by fear — but with inflation expectations cooling and the possibility of trade normalisation, the metal could see a major correction,” Mills said.
What’s next for gold?
According to Rahul Kalantri, VP Commodities at Mehta Equities, extreme volatility is here to stay. He noted that gold has key support at $3,000–2,978 per ounce and resistance at $3,055–3,075 per ounce, while in Indian rupee terms, the range is ₹87,350–89,190 per 10 grams.
“A weaker-than-expected US jobs report, dovish Fed commentary, and rising global risk aversion all contributed to the volatility,” Kalantri said.