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.
Don't Miss Our End of Quarter Offers:
Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks.
Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter.
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.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Global News
an hour ago
- Global News
World Bank lowers global growth forecast, citing trade war ‘turbulence'
U.S. President Donald Trump's trade wars are expected to slash economic growth this year in the United States and around the world, the World Bank forecast Tuesday. Citing 'a substantial rise in trade barriers'' but without mentioning Trump by name, the 189-country lender predicted that the U.S. economy – the world's largest – would grow half as fast (1.4 per cent) this year as it did in 2024 (2.8 per cent). That marked a downgrade from the 2.3 per cent U.S. growth it had forecast back for 2025 back in January. The bank also lopped 0.4 percentage points off its forecast for global growth this year. It now expects the world economy to expand just 2.3 per cent in 2025, down from 2.8 per cent in 2024. In a forward to the latest version of the twice-yearly Global Economic Prospects report, World Bank chief economist Indermit Gill wrote that the global economy has missed its chance for the 'soft landing'' — slowing enough to tame inflation without generating serious pain — it appeared headed for just six months ago. Story continues below advertisement 'The world economy today is once more running into turbulence,' Gill wrote. 'Without a swift course correction, the harm to living standards could be deep.'' Get daily National news Get the day's top news, political, economic, and current affairs headlines, delivered to your inbox once a day. Sign up for daily National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy America's economic prospects have been clouded by Trump's erratic and aggressive trade policies, including 10 per cent taxes — tariffs — on imports from almost every country in the world. These levies drive up costs in the U.S. and invite retaliation from other countries. 1:46 Can the Liberal government's trade bill unify Canada's economy? The Chinese economy is forecast to see growth slow from five per cent in 2024 to 4.5 per cent this year and four per cent next. The world's second-largest economy has been hobbled by the tariffs that Trump has imposed on its exports, by the collapse of its real estate market and by an aging workforce. The World Bank expects the 20 European countries that share the euro currency to collectively grow just 0.7 per cent this year, down from an already lackluster 0.9 per cent in 2024. Story continues below advertisement Trump's tariffs are expected to hurt European exports. And the unpredictable way he rolls them out — announcing them, suspending them, coming up with new ones — has created uncertainty that discourages business investment. India is once again expected to the be world's fastest-growing major economy, expanding at a 6.3 per cent clip this year. But that's down from 6.5 per cent in 2024 and from the 6.7 per cent the bank had forecast for 2025 in January. In Japan, economic growth is expected to accelerate this year – but only from 0.2 per cent in 2024 to a sluggish 0.7 per cent this year, well short of the 1.2 per cent the World Bank had forecast in January. The World Bank seeks to reduce poverty and boost living standards by providing grants and low-rate loans to poor economies. Another multinational organization that seeks to promote global prosperity — the Organization for Economic Cooperation and Development — last week downgraded its forecast for the U.S. and global economies.
Globe and Mail
2 hours ago
- Globe and Mail
'The Multi-Year Rebuild…Is Working' Walmart Stock (NYSE:WMT) Gets Boost From Mizuho
Giant retailer Walmart (WMT) has been working to recover from the hits it took trying to compete with online stores and its own negative image. 'People of Walmart,' anyone? But the long road it has taken to recover seems to be working, and as far as Mizuho Securities is concerned, it already has worked. Investors were willing to play along, and gave shares a fractional boost in Monday afternoon's trading. Confident Investing Starts Here: Mizuho, via analyst David Bellinger, noted, 'The multi-year rebuild into a much more tech-led player is working, with a focus on speed of delivery and further volume gains ahead.' In fact, Bellinger noted, Walmart was on track to clear $100 billion in annual ecommerce revenues just in the United States. This would put ecommerce as 10% of Walmart's total annual sales in the United States, and that in turn would make it the second largest online player, with only Amazon (AMZN) ahead of it. This in turn is opening up significant opportunities for Walmart as a power in not only domestic sales, but also in '…advertising, marketplace, and membership…' opportunities as well. Chasing the Kids Meanwhile, Walmart is acutely aware of the impact of tariffs on its operations, especially after the person perhaps most responsible for putting them there, President Trump, demanded Walmart 'eat the tariffs' rather than hike prices. Walmart may not have completely followed orders on that one, but there are signs that Walmart is actively courting the younger demographics as it pursues young shoppers. In fact, reports note, Walmart pulled out a whole new ad campaign designed to haul in the youngsters, along with a tween-focused clothing brand. Walmart even has plans to ramp up its drone deliveries as well, trying to get more shoppers to part with their money in a time when everyone is starting to feel the pinch, and is pulling in their spending accordingly. Is Walmart Stock a Good Buy Right Now? Turning to Wall Street, analysts have a Strong Buy consensus rating on WMT stock based on 28 Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 45.56% rally in its share price over the past year, the average WMT price target of $109.66 per share implies 12.63% upside potential. See more WMT analyst ratings Disclosure Disclaimer & Disclosure Report an Issue
Winnipeg Free Press
3 hours ago
- Winnipeg Free Press
Trump's tax bill could raise taxes on foreign companies, hurting investment from abroad
WASHINGTON (AP) — President Donald Trump likes to say he's bringing in trillions of dollars in investments from foreign countries, but a provision in his tax cuts bill could cause international companies to avoid expanding into the United States. The House-passed version of the legislation would allow the federal government to impose taxes on foreign-parented companies and investors from countries judged as charging 'unfair foreign taxes' on U.S. companies. Known as Section 899, the measure could cause companies to avoid investing in the the U.S. out of concern they could face steep taxes. The fate of the measure rests with the Senate — setting off a debate about its prospects and impact. A new analysis by the Global Business Alliance, a trade group representing international companies such as Toyota and Nestlé, estimates that the provision would cost the U.S. 360,000 jobs and $55 billion annually over 10 years in lost gross domestic product. The analysis estimates that the tax could cut a third off the economic growth anticipated from the overall tax cuts by Congress' Joint Committee on Taxation. 'While proponents say this punitive tax hike is intended as a retaliatory measure against foreign governments, this report confirms that the real victims are American workers in states like North Carolina, South Carolina, Indiana, Tennessee and Texas,' said Jonathan Samford, president and CEO of the Global Business Alliance. Republican Rep. Jason Smith of Missouri, chair of the House Ways and Means Committee, has defended the provision as protecting U.S. interests by giving the president a tool that can be used against countries with tax codes that, in the federal government's opinion, put American companies at a disadvantage. 'If these countries withdraw these taxes and decide to behave, we will have achieved our goal,' Smith said in a statement last week. 'It's just common sense. I urge my colleagues in the Senate to move quickly to pass this bill and protect Americans from economic bad actors around the world.' The tax gets at a fundamental tension within Trump's policy agenda: a contradiction in the broad strokes of Trump simultaneously trying to tax imports and foreign profits at higher rates while also seeking investments from companies headquartered abroad. In late May, Trump defended his approach by saying that his tariffs were causing more countries to invest in the U.S. to avoid imports getting taxed. While some countries and companies have made announcements, there is not evidence of the investments pushing up spending on new factories as measured in the government's monthly report on construction spending. The Republican president said his tendency to impose steep tariffs, then retreat to lower rates, had succeeded. 'We have $14 trillion now invested, committed to investing,' Trump said then. 'You know we have the hottest country anywhere in the world. I went to Saudi Arabia, the king told me, he said, you got the hottest — we have the hottest country in the world right now.' The Global Business Alliance was among the groups that signed a letter on Monday warning of the consequences of Section 899 to Senate Majority Leader John Thune of South Dakota and Senate Finance Committee Chairman Mike Crapo of Idaho, both Republicans. The Investment Company Institute, representing financial firms, said the provision 'could limit foreign investment to the U.S. — a key driver of growth in American capital markets that ultimately benefits American families saving for their futures.' The analysis performed by EY Quantitative Economics and Statistics notes there is a degree of uncertainty in how the taxes under Section 899 could be implemented. But they could be charged against companies based in countries that tax digital services, as is the case in parts of Europe. If the U.S. judged the taxes unfair, there would be a 30% tax rate on foreign companies' profits and income. People working in the U.S. for the companies who are not citizens could also be taxed, among other provisions. Monday Mornings The latest local business news and a lookahead to the coming week. The possibility of the taxes and seemingly arbitrary nature by which they could be imposed is also a challenge, said Chye-Ching Huang, executive director of New York University's Tax Law Center. 'Section 899 creates a game of political chicken with trade partners that risks harming businesses, consumers, and workers in the hopes of securing US multinationals the ability to shift more of their profits out of the US to tax havens,' Huang said in an email. 'It's a high-risk strategy that could expand the damage of the failed tariff war.' There could also be political repercussions if key states in Trump's political coalition from 2024 suffer layoffs or simply find job growth slowing. The Global Business Alliance finds job losses could amount to 44,200 in Florida, 27,700 in Pennsylvania, 24,500 in North Carolina and 23,500 in Michigan. ___ Associated Press writer Fatima Hussein contributed to this report.
