The rally needed to stop or at least pause, eventually. Gold Shares ETF (GLD) unexpectedly dropped by 1.88% last Friday. Silver (SLV) also fell. Both metals touched all-time highs before the decline. Traders attributed the drop to President Trump giving China reassurances that his latest tariff threat will not get far.
Trump said he planned to meet Chinese President Xi later this month in South Korea. He said that the latest threat of a 100% tariff on China’s exports was not sustainable. However, he said that China started the dispute when it announced restrictions on rare earth exports.
China countered that the U.S. “deliberately provoked” the misunderstanding surrounding rare earth restrictions. China said that it would grant export licenses provided the rare earths are for civilian use. Still, the military and defense sectors would face disruptions from the restriction.
Analysts raised their outlook on gold recently. HSBC, for example, is forecasting a $3,455/oz price target. Societe Generale and Bank of America both forecast a $5,000/oz price in the first half of 2026.
Gold investors should ignore such price targets. No one may predict what gold prices will look like. It depends on trade tensions continuing between China and the U.S. In addition, the U.S. needs to continue spending heavily, paying more on its interest on debt. That decreases the appeal of its currency. That boosts the value of gold and silver as consumers use them as a store of value.
