Gold slumps as Trump tariffs roil markets, but it remains a safe-haven choice: analysts

The price of gold has tumbled amid shock waves from the tariff war between the United States and China, but the precious metal remains the safe-haven asset of choice in times of volatility, analysts said.

Analysts attributed the drop to short-term sell-offs by traders needing to cover losses from other asset classes.

Alex Chiu, senior exchange-traded fund (ETF) strategist at asset management firm Value Partners, said gold could be used to mitigate losses when the wider market was experiencing “abnormal volatility”.

“During market downturns … brokers may initiate a margin call that sells off gold to cover losses in other positions,” he said, adding that gold was an easily liquidated asset.

Trump’s tariff onslaught has triggered a steep downturn in the world’s financial markets. Hong Kong’s benchmark Hang Seng Index slumped 13.2 per cent on Monday, wiping out HK$194 billion (US$25 billion) in value in its biggest decline since October 1997.

Gary Ng, a senior economist at Natixis Corporate and Investment Bank, said the sell-off in gold was likely to be a short-term phenomenon.