Gold Dips from Record High as Market Turmoil Sparks Profit-Taking

Gold prices pulled back on Thursday after a sharp rally, slipping from record highs as global market turbulence spilled over into the bullion market.

Gold prices slipped on Thursday from a record high as global market turbulence, sparked by newly imposed tariffs, spilled over into the bullion market, prompting investors to take some profit from the recent stellar gains.

The downturn came as investors reacted to the U.S. tariffs on goods from Mexico, which President Donald Trump announced on Thursday. The tariffs, if fully implemented, are set to escalate from 5% to 25% by October.

Earlier in the session, spot gold surged to a historic peak of $3,167.57 before slipping by 0.85% to trade around $3,106.99 at 3:08 AM ET (7:08 AM GMT). Meanwhile, U.S. gold futures settled down 1.4% at $3,121.70.

“I think it’s just profit-taking and margin calls. People are liquidating their gold positions to cover losses from other assets,” said Peter Grant, vice president and senior metals strategist at Zaner Group.

The sudden sell-off was also triggered by broad-based de-leveraging pressures as investors are closing out risky positions to minimize further losses, which could open up an opportunity for buyers to accumulate at lower levels.

“Those who like the lower level can buy the dip. It’s still a good level to enter. People are cutting their positions to meet margin calls and some are also taking profit off the gold rally,” Grant added.

He pointed out that while some traders are liquidating gold to meet margin requirements, the precious metal’s long-term appeal as a safe-haven asset remains strong.

The tariff announcement, which sparked a broad market slump, has heightened concerns about its potential impact on economic growth, especially at a time when the global economy is already facing headwinds.

Despite the short-term decline, gold is still up more than $500 from the beginning of the year, driven by a confluence of factors, including trade tensions, Brexit woes, and geopolitical unrest.

These factors have prompted investors to pour money into safe-haven assets like gold and the Japanese yen, while pulling out of riskier assets, such as stocks and emerging-market currencies.

“It’s just a temporary retracement within a broader bullish trend,” said David Meger, director of metals trading at High Ridge Futures in New York.

“We’re still in a bull market for gold. The long-term bullish case for gold is still very much intact.”

Central banks are also increasing their purchases of gold as they seek to diversify their reserves and reduce their reliance on the dollar amid geopolitical uncertainties.

The world’s largest gold ETF, iShares Gold Trust , saw an outflow of 16.8 tons in April, marking the largest monthly withdrawal since the ETF launched in 1990.

However, some analysts, including those at HSBC, note that while gold prices may continue to rise in the first half of the year, a combination of physical and financial factors could weigh on prices by the end of 2025.

HSBC analysts project that the average gold price will be around $3,015 by the end of the year, as market dynamics and macroeconomic trends play out in the coming months.