Gold retreats as stock market selloff prompts investors to cover losses

Gold fell more than 3% on Friday, erasing gains from earlier in the week, as investors sold off bullion to cover their losses from a wider market meltdown as an intensifying trade war sparked concerns of a global recession.

Spot gold was down 2.9% at USD 3,024.2 an ounce as of 1:44 p.m. EDT (1744 GMT), after hitting a session low of USD 3,015.29 earlier in the session. It hit a record high of USD 3,167.57 on Thursday. For the week, gold was down 1.9%.

US gold futures settled 2.8% lower at USD 3,035.40.

On the technical front, spot gold price managed to hold above its 21-day moving average of USD 3,023.

“We tend to see gold as a liquid asset being used to meet margin calls elsewhere, so it’s not unusual for gold to sell off after a risk event given the role that it can play in a portfolio,” said Suki Cooper, an analyst at Standard Chartered.

“It’s behaving in line with the historical trends.”

Global stocks fell for a second consecutive day, with the S&P 500 .SPX and Nasdaq Composite IXIC indices down about 5% each, after China announced additional tariffs of 34% on all US goods starting from April 10, in response to reciprocal tariffs unveiled by US President Donald Trump this week.

Gold, however, is still up about 15.3% this year, driven by robust central bank purchases and its overall appeal as a safe hedge against economic and geopolitical uncertainties.

Despite the volatility, “gold is still a safe-haven place for many investors,” said Matt Simpson, a senior analyst at City Index.

Meanwhile, Federal Reserve Chair Jerome Powell said Trump’s new tariffs are “larger than expected” and the economic fallout, including higher inflation and slower growth, likely will be as well.

The dollar index rose 0.7% against its rivals. A higher dollar makes greenback-priced bullion more expensive for overseas buyers.

Traders also took stock of better-than-expected US jobs data.

“I think (nonfarm payrolls data) is going to help the Federal Reserve’s case to continue delaying lowering the interest rates,” said Alex Ebkarian, chief operating officer at Allegiance Gold.

Gold tends to thrive in a low-rate environment.

Silver declined 7.3% to USD 29.54 an ounce and was headed for its worst week since September 2020.

Platinum lost 3.6% to USD 918.35 and palladium slipped 2% to USD 909.75, with both headed for a weekly loss.

(Reporting by Anmol Choubey in Bengaluru; Editing by Vijay Kishore, Paul Simao, and Shreya Biswas)