The precious metals market was rocked this week as gold prices suffered their steepest decline of 2025, plummeting over 3% on Monday alone following the surprise announcement of a temporary trade agreement between the United States and China. With prices now down 9% from April's record high of $3,500, savvy investors are quietly positioning themselves for what could be a limited-time entry point in the ongoing gold bull market.
Why Gold Crashed
The dramatic selloff was triggered by Sunday's announcement of a 90-day trade truce between the U.S. and China, which immediately reduced U.S. duties on Chinese goods from 145% to 30% and Chinese tariffs on U.S. imports from 125% to 10%. This unexpected development sparked a broad risk-on sentiment across financial markets, diminishing gold's safe-haven appeal virtually overnight.
As veteran metals trader Tai Wong noted, "The global relief rally sparked by the steep reduction in US-China tariffs has triggered a correction through technical levels in gold." The market's sharp reaction demonstrates how quickly sentiment can shift in precious metals markets, especially following major geopolitical developments.
The Critical Context Most Are Missing
Despite the sharp correction, gold remains up an impressive 21% year-to-date, significantly outperforming most major asset classes in 2025. Central banks purchased a substantial 244 tonnes of gold in the first quarter alone, continuing a multi-year accumulation trend that has been a key price support.
- YTD Performance: Gold up 21% despite recent correction
- Central Bank Buying: 244 tonnes purchased in Q1 2025
- Chinese Retail Investment: Second-highest level on record
- Global Demand: Bar and coin demand 15% above five-year quarterly average (325 tonnes)
Chinese retail gold investment reached its second-highest level on record, with global bar and coin demand remaining 15% above the five-year quarterly average at 325 tonnes. These fundamental drivers remain unchanged despite the recent price volatility, suggesting the current selloff may be more about sentiment than substance.
