Spot gold reached an all-time high of $3,500 per ounce during U.S. trading hours on Tuesday, April 22. But the rally was short-lived. Prices quickly reversed course after former President Trump made unexpectedly conciliatory remarks about U.S.–China trade relations. Gold eventually closed the day down 2.3% at $3,420 per ounce. These wild price swings underscored just how sensitive markets are to political signals and how impactful a single statement can be in shaping investor sentiment.
The initial surge in gold prices was driven by a weakening U.S. dollar and growing expectations that the Federal Reserve might soon pause interest rate hikes. Earlier this week, the dollar index dropped to 97.99—a four-year low—while Philadelphia Fed President Patrick Harker signaled a more dovish tone, adding fuel to speculation that the Fed is shifting course. These conditions had been boosting demand for safe-haven assets like gold.
However, sentiment flipped abruptly when Trump stated in a White House press briefing that the U.S. would approach trade talks with China in a “very friendly” manner. He also mentioned the possibility of “substantially lowering tariffs” if the two countries reached a deal. This softened rhetoric eased fears of a new escalation in the trade war and triggered profit-taking in gold, eroding its safe-haven appeal.
Despite the optimistic tone, Trump clarified that tariffs “will never go down to zero,” suggesting any adjustments would come with reciprocal terms. On the same day, Treasury Secretary Vincent Benson reportedly acknowledged in a closed-door session that the current tariff structure is “not sustainable”—a subtle hint at a potential policy shift from the White House.
As gold touched historic highs, some institutional investors chose to lock in profits. Physical gold deliveries at the London Metal Exchange jumped 12% compared to the previous day, indicating that capital was being strategically repositioned and portfolios rebalanced.
Meanwhile, China’s Ministry of Commerce issued a rare and firm response, emphasizing that it “will not accept any deal that compromises core national interests.” This was widely interpreted as a direct warning to Washington over its proposal to impose additional tariffs on Chinese solar products. Nevertheless, reports suggest that working-level talks between the U.S. and China have quietly resumed—a sign that both sides are pivoting toward de-escalation. Market pricing of risk has responded accordingly: the 25-day implied volatility on gold options, a common gauge of short-term hedging demand, fell sharply from 4.32 to 3.89.
Bitcoin also continued its upward trajectory, breaking through the $82,000 mark. However, its performance has increasingly diverged from gold. While physical gold is still driven by central banks and sovereign wealth funds, crypto’s rise appears to be fueled by institutional demand promoting the “digital gold” narrative. These differing dynamics reflect contrasting strategies for inflation hedging and capital preservation.
From a central bank standpoint, gold purchasing remains robust. In Q1 2025, global central banks added a net 295 metric tons of gold to their reserves—a 37% year-over-year increase. China’s central bank alone bought 95 metric tons, raising its total official reserves to 2,865 metric tons and solidifying its leadership among national gold holders. India’s central bank recently approved a policy allowing commercial banks to count gold toward liquidity ratios, a move expected to boost annual gold imports by 20%.
This sustained central bank demand highlights ongoing efforts to diversify away from U.S. dollar assets. Still, market shifts in risk appetite—such as Trump’s surprise pivot on trade policy—can trigger temporary pullbacks in gold prices. On the day of the reversal, gold open interest at the London exchange rose 8%, suggesting investors are positioning to buy the dip, looking for attractive entry points as geopolitical tensions ease.
Looking ahead, attention is turning to upcoming U.S. new home sales data and comments from ECB President Christine Lagarde. If U.S. March home sales come in below the expected 2.8% monthly growth rate, it could strengthen the case for a Fed pause. That said, any positive developments in U.S.–China trade talks may offset the impact of soft economic data. Also on the radar: the results of this week’s U.S. five-year Treasury auction, particularly the level of foreign demand, which will hint at the appeal of dollar-denominated assets going forward.
On the technical front, gold has found solid support at the $3,400 level. If that breaks, the next major support sits near the 100-day moving average at $3,350. Still, with central banks—especially in emerging markets—steadily adding physical gold, and institutional investors keen to buy on pullbacks, there’s a fairly strong policy-driven floor in place. While gold’s short-term path may remain choppy, its longer-term bullish trend appears intact.