Gold price initially rises to record high and then falls sharply - Commerzbank

The Gold price initially rose to a new record high of $3,168 per troy ounce in response to US President Trump's tariff announcements, but then fell back significantly, Commerzbank's commodity analyst Carsten Fritsch notes.

Gold is off its record highs for now

"At times, the price fell more than $100 from the aforementioned record high in the course of trading. It is not unusual for Gold to initially come under pressure in times of high risk aversion. This is because market participants often liquidate their Gold positions in order to offset losses elsewhere. Gold usually recovers its losses quickly, which could also be the case this time."

"After all, the market is now expecting the Fed to cut interest rates by 100 basis points by the end of the year. At the same time, inflation risks are rising in the US due to tariffs. This combination points towards a significantly lower real interest rate and therefore a higher Gold price."

"Gold, as well as other precious metals, was exempted from the tariffs. As a result, there is no longer any reason to ship Gold to the US to the same extent as before. Gold inventories on the Comex have risen by 720 tons since the beginning of the year. Yesterday there was a further increase of 18 tons. This additional demand is now likely to cease or at least be significantly lower going forward."