How to understand this round of adjustment in gold?

Deutsche Bank pointed out that the current gold pullback is fundamentally different from that in early April. The recent decline in gold prices is mainly due to the rebound of the US dollar and the market's excessive interpretation of tariff news.

On April 23, Deutsche Bank published a research report stating that the current adjustment in gold prices is essentially different from the pullback in early April. In early April, gold prices fell alongside significant downward volatility in the S&P index, whereas this time, the weakening of gold prices occurred in an environment of low volatility and rising S&P index.

Typically, when the US dollar rises, gold prices will fall. However, Deutsche Bank analysts believe that based on the long-term estimated dollar beta coefficient from 1998 to 2022, explaining Tuesday's decline in gold prices from peak to trough solely through dollar factors can only account for about half. Therefore, focusing solely on the dollar is clearly incomplete.

(Orange Dollar Index vs Blue Gold Price)

Deutsche Bank pointed out that the tariff shock in early April was an important factor driving the accelerated growth of gold, and currently, the US tariff issue has not been resolved, and there remains significant uncertainty in the outlook, so the extent of the gold pullback is limited.

Market Overinterpretation of US Tariff Stance

Deutsche Bank noted that the market's interpretation of a softening US policy stance may have been overstated. The attitudes of the US's main trading partners indicate that trade negotiations will not proceed as smoothly as Trump hoped.

On April 23, CCTV News reported that the White House has recently stated that trade negotiations with Mexico, Japan, the European Union, and others have made so-called "significant progress," but all parties have repeatedly denied the US's claims. Developed economies such as Europe and Canada aim to achieve conditional compromises with the US through countermeasures.

Deutsche Bank analyzed that the global supply chain cooperation pattern is complex, and coordination difficulties are increasing. Currently, many negotiations have not yet begun, and many issues remain to be determined, reducing the likelihood of reaching a "status quo" in the short term. Investors expecting a complete improvement in trade relations in the short term, with gold prices "rewinding" back to levels before the tariff news, are likely to be disappointed.