As gold falls below 3000, Wall Street issues consecutive reports: Tariff support, gold prices will rise again!

After the introduction of Trump's "reciprocal tariff" policy, gold's status as a safe-haven asset has once again been highlighted.

Wall Street investment banks believe that the current resonance of global trade war risks and geopolitical uncertainties will provide strong support for gold prices, and this round of correction may be an excellent buying opportunity.

In the latest research report, Goldman Sachs maintains its expectation that gold prices will reach over $3,300 by the end of the year, Deutsche Bank expects gold prices to reach $3,350/ounce by the end of the year, and HSBC has raised its gold price target, expecting central bank gold purchases and safe-haven ETF inflows to be the core driving forces behind rising gold prices. After briefly falling below the $3,000 mark, gold prices have returned above this level.

Tariffs Pave the Way for Gold's Rise

According to CCTV News, on April 2 local time, the United States announced the imposition of personalized higher "reciprocal tariffs" on the country with the largest trade deficit with the U.S., which will officially take effect on April 9. According to Goldman Sachs' report, the impact of the tariff policy on gold mainly occurs through two major channels:

First is the direct impact, currently, among metal categories, steel and aluminum have already been affected by a 25% tariff, and copper will be included later this year;

Second is the indirect impact, which refers to the increase in safe-haven sentiment caused by the global economic slowdown due to tariffs.

It is worth noting that the U.S. has excluded commodities such as gold, copper, and energy from reciprocal tariffs. According to Goldman Sachs' report, although the U.S. has announced import tariffs on industrial metals such as steel and aluminum, and may expand this to copper, gold and energy are expected to continue to be exempt from tariffs. This means that the impact of tariffs on the gold market mainly comes from indirect channels—global economic slowdown and rising safe-haven demand.

Geopolitical Risks Continue to Evolve, Providing Structural Support for Gold Prices

In addition to trade tensions, geopolitical risks are also a major factor driving gold's strength. HSBC's research confirms that gold performs excellently as a safe-haven asset during periods of economic and geopolitical uncertainty.

During times of global uncertainty and financial market pressure, gold has an almost undisputed role as a safe-haven and high-quality asset.

The bank pointed out in its report that gold is an "extraordinary metal," and its recent breakthrough of $3,000/ounce is largely attributed to a combination of various geopolitical risks and economic policy uncertainties, including the Ukraine conflict, Middle East conflicts, shifts in U.S. foreign policy, and tensions in transatlantic relations

Looking back at history, gold broke through $1,000 per ounce during the peak of the 2008 financial crisis, surpassed $2,000 per ounce during the COVID-19 pandemic in 2020, and has now broken through $3,000 per ounce against the backdrop of escalating geopolitical and trade risks.

Goldman Sachs analysts are also bullish on gold, maintaining their forecast that gold prices will reach $3,300 per ounce by the end of the year, believing that the risks are skewed to the upside.

Not only will purchases by emerging market central banks continue to provide structural support, but increased ETF demand will further support gold prices as the Federal Reserve cuts interest rates and recession fears emerge.

Tariff policies have also had a significant impact on the physical delivery market for gold. The Gold EFP (Exchange for Physical) is a mechanism for converting futures positions on the CME (Chicago Mercantile Exchange) to London physical gold accounts, which is crucial for maintaining market order.

According to a report by HSBC, concerns about potential tariffs on gold imports have led to increased volatility in the EFP market. This has prompted millions of ounces of gold to be transferred from places like London to CME warehouses in New York, significantly increasing CME warehouse inventories. Although gold currently seems unaffected by tariffs, uncertainty remains in the market, and the EFP market may remain volatile until policies regarding gold import tariffs are clarified.

Central Bank Gold Purchases: Driven by Both Hedging and Diversification

Since 2022, demand for gold from central banks has surged, becoming one of the main drivers of gold price increases over the past two years.

The HSBC report indicates that central bank gold demand reached 1,082 tons in 2022 and is expected to reach 1,050 tons in 2023, significantly higher than the average of 455 tons over the past decade.

Moreover, HSBC expects central bank gold purchases to reach 925 tons in 2025, slightly lower than in 2024, but still at a high level from a historical perspective. The main factor limiting further purchases by central banks is high prices, rather than a weakening of hedging demand.

Goldman Sachs also believes that purchases by emerging market central banks will continue to provide structural support for gold prices, especially in an environment of heightened geopolitical risks and economic uncertainty.

Is a Pullback an Opportunity?

Goldman Sachs pointed out that recently, with the announcement of tariff policies, gold prices have retreated from this week's historical highs, which does not reflect a deterioration in the fundamentals of gold but rather indicates two points: investors are closing gold positions to meet margin calls in response to the continued decline in the stock market; and after the initial uncertainty regarding reciprocal tariffs is resolved, investors may turn to other asset classes.

However, Goldman Sachs clearly sees this pullback as a buying opportunity:

We view this (and any future) pullback in the gold market as an opportunity for investors to go long on gold, which remains our most confident view in commodities.

HSBC believes that the short-term trend for gold prices still leans towards the upside, and a pullback may not occur until the second half of this year. The bank has raised its average gold price forecast for 2025 to $3,015 per ounce (previously $2,687 per ounce), expecting the trading range for the year to be between $2,800 and $3,350. **