Risk Reset: Gold Plunges Below $4,800 as Trump Pauses Trade War Threads

Safe-haven assets faced a sharp sell-off on Thursday as geopolitical tensions eased significantly, prompting a rotation back into riskier equities. Gold (XAU/USD), which had recently tested the $4,900/oz psychological resistance, tumbled approximately 0.9% to trade near $4,785 during the Asian session.

The catalyst for the reversal was a sudden diplomatic pivot from the White House. President Trump announced a suspension of imminent tariffs on European allies, citing a newly formed “framework agreement” regarding security and resource access in Greenland and the Arctic.

The Geopolitical Put Expires

Just days after threatening military force and punitive levies against NATO members, Trump explicitly ruled out the use of force in Greenland, shifting instead to a strategy of negotiation for mineral rights and base access.

“I don't have to use force... we have a framework for a future agreement,” Trump stated in Davos. This rhetoric shift effectively removed the immediate “Trade War premium” that had bolstered precious metals.

Market Reaction

• Gold & Silver: Significant profit-taking emerged. Silver dropped 0.8%, falling below critical support levels as the “fear trade” unwound.
• Equities: Risk sentiment rebounded, with Asian markets surging. South Korea's KOSPI breached the 5,000 mark for the first time.
• Yields: US Treasury yields stabilized as the immediate threat of inflationary tariffs on European goods was priced out.

Analysts warn that while the immediate tension has diffused, the unpredictability of foreign policy remains a structural driver. “Trump's reversal solved a crisis of his own making, but erratic policy swings suggest gold will remain a key portfolio hedge,” noted strategists.

Technicals

• Key Resistance (XAU/USD): $4,900/oz
• Current Trade Level: $4,785
• Equity Milestone (KOSPI): 5,000