Multiple Factors Restrict Gold Prices, Making It Difficult for Them to Break Through in the Short Term

In early April, the release of the US tariff policy significantly reduced risk appetite in global investment markets, leading to notable selling pressure in the gold market. On April 9, the intensifying downward pressure on the US economy and trade frictions sparked concerns about the US's debt repayment capacity, with its large and continuously expanding debt scale coming under market scrutiny. Against this backdrop, from April 7 to 11, the US Treasury bond market, a traditional safe-haven asset, experienced a reversal, with long-term US Treasury bond prices falling by a maximum cumulative 8.7% over three trading days, fully reflecting the shift in global investors' market expectations. Influenced by this, the safe-haven attribute of gold once again became prominent. From April 9 to 22, market allocation demand surged, driving a significant increase in gold prices.

As the trade situation evolved, potential risks in the financial system and policy constraints gradually emerged. By month-end, market sentiment stabilized, and gold prices returned to a rational range. Subsequent tariff trade negotiations continued to advance, and with the emergence of unexpected signals, gold prices extended their downward trend. From the current market landscape, it appears that gold prices may struggle to achieve a unidirectional trend breakout in the short term.

The latest economic data shows that in Q1, the US's real gross domestic product contracted by 0.3% on an annualized QoQ basis, marking the lowest quarterly performance in nearly three years. The trade sector also faced pressure, with the US trade deficit continuing to widen since December 2024. Data released by the US Department of Commerce on May 5 showed that, after seasonal adjustment, the US goods and services trade deficit surged by 14% MoM in March, reaching a historical peak of $140.5 billion, dragging down GDP growth for the quarter by more than 4%.

On the monetary policy front, the Federal Open Market Committee (FOMC) repeatedly emphasized the upward pressure on inflation and the risk of rising unemployment in its May monetary policy statement. Influenced by multiple factors such as geopolitical conflicts, global inflation expectations, and intensifying trade imbalances, gold prices are likely to hover at highs in the short term, with its safe-haven attribute and value storage function continuing to provide effective support for prices.

The expansion of upside room in the gold market in the future will highly depend on the evolution of risks in areas such as US trade, economy, and fiscal deficits. Once systemic risks emerge in these areas, accompanied by spillover effects, they will form the core driving force for gold prices to embark on a new round of upward cycles.

Looking back at US fiscal data, since 2020, the scale of US federal debt has accelerated its expansion. In 2024, the US federal deficit reached $1.8 trillion, accounting for 6.4% of that year's GDP, while debt interest payments exceeded the $1 trillion threshold in fiscal year 2024. Reviewing the market performance in mid-April, the market adjustments triggered by fluctuations in US economic data and changes in policy expectations provided important reference points for the current trends in the gold market. Against the backdrop of rising global economic uncertainty, the allocation value of gold as a safe-haven asset will exhibit phased fluctuations in line with the evolution of US economic risks.

Sino-US bilateral trade demonstrates significant complementary characteristics, with the growth trend of US exports to China being particularly prominent, significantly outpacing its global export growth rate. Since China's accession to the World Trade Organization, the scale of US exports to China has entered a phase of rapid expansion, and China has gradually developed into an important goods export market for the US. According to United Nations statistics, from 2001 to 2024, US goods exports to China surged from $19.18 billion to $143.55 billion, marking a substantial increase of 648.4%. During the same period, the growth in US global goods exports was only 183.1%.

Against the backdrop of positive progress in recent Sino-US trade talks, gold prices have entered a correction phase and are gradually testing the support levels below. Market risk appetite has stabilized, and the likelihood of gold prices breaking out of the current range in the short term is relatively small. It is expected that gold prices will oscillate between recent highs and lows. Compared to gold, silver possesses dual characteristics of both industrial and safe-haven attributes. With the gradual improvement in market sentiment in recent times, industrial demand expectations have rebounded somewhat. Supported by the potential safe-haven attribute, silver prices have an opportunity to exhibit relative strength in the short term.

(Author's affiliation: Haizheng Futures)