Gold Investors Take a Pause for Breath on Fears That Liberation Day Could Lead to Price Retreat
Gold investors in ETFs such as the VanEck Gold Miners (GDX) are steeling themselves today to find out whether President Trump's Liberation Day tariffs announcement will take the shine off their precious metal.
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Gold Price Caution
Gold prices have rocketed in recent weeks with the spot price hitting a new all-time high of around $3,149.00 per ounce on Tuesday, April 1. It is up 19% in the year to date driven by investors flocking to it as a safe haven in a time of great economic uncertainty – thanks to fears over a global tariffs-led trade war – and geopolitical tension from Ukraine, to the Middle East and Taiwan.
It's benefited ETFs such as the GDX which is up 35% so far this year and the SPDR Gold Shares ETF (GLD) which is up nearly 19%. Gold mining stocks like Barrick Gold (GOLD) have also prospered.
However, caution is the golden word today as President Trump gets set to make his big Liberation Day announcement on tariffs. The spot gold price in early trading was largely unmoved at $3,124 with both the GDX and GLD flat.
Is the Rally Over?
Kathleen Brooks, research director at XLB, said the peak may have been reached. 'Gold is the ultimate tariff trade but the gold price faces a big test ahead,' she said. 'If U.S. stock markets start to rally after the tariff announcement is out of the way, can the gold price continue to rally?'
She believes that the rally in the gold price is linked to U.S. economic policy uncertainty and once this starts to recede 'the gold price could follow.'
But, arguably, tariffs aren't the sole driver. The expectations of interest rate cuts, return of higher inflation, central banks bulking up on the metal and the strong demand for ETFs like GDX and GLD could help keep the gold price prospering.
Also, is it really likely that given Trump's character and previous behavior that a 'line in the sand' will be drawn today? The President is a well-known 'flip-flopper' with announcements – even perhaps to his own surprise – emerging when least expected. A prolonged trade war is also likely to ease any uncertainty in investors' minds.
It's why analysts such as those at Bank of America have raised their gold price average forecasts for both this year and next. It expects gold to soar to a record $3,350 in 2026.
The President will make his announcement on tariffs at 4pm EST today.
Is the GDX ETF a Buy?
Most Wall Street analysts don't offer ratings or price targets on the GDX, so we will look at its three month performance instead. As one can see in the chart below it has risen 29.60% over the last 12 weeks.
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