Gold Hits $3500 as China Warns of 'Irrational Trading', Trump Attacks Powell Again
Tuesday, 4/22/2025 17:08
The PRICE of GOLD sank into the London bullion market's benchmarking auction on Tuesday after trading within 80 cents of $3500 per ounce to set its 26th new record high in US Dollar terms of 2025 so far.
Gold trading in No.1 consumer nation China extended this month's jump, with the authorities warning against "irrational" investing in strong echoes of
last spring's Chinese gold investment boom.
The Dollar meantime rallied from new 3-year lows, while US stock markets rebounded from Monday's plunge following President Trump intensifying his attack on central-bank chairman Jerome Powell at the Federal Reserve.
Tweeting last Thursday that "Powell's termination
cannot come fast enough!" before telling reporters that "If I ask him to, he'll be out of there" from the Federal Reserve, Trump yesterday said the USA now risks an economic recession "unless Mr.Too Late, a major loser, lowers interest rates, NOW."
Wholesale gold bullion in China today set its 9th new record high in a row, fixing at ¥830 per gram − equivalent to $3535 per Troy ounce − to rise 14.0% across April to date as trading volumes on the Shanghai Gold Exchange jumped 75% to the heaviest since the global Covid Crisis of March 2020.
That put Shanghai premiums relative to London bullion quotes at $25 per Troy ounce, sharply down from Monday's level of $40 but still 3 times the typical incentive for new bullion imports.
Gold derivatives trading on the Shanghai Futures Exchange meanwhile leapt by 125% while today's volume in China's largest gold bullion-backed exchange traded fund breached 10 billion Yuan for the first time ever (US$1.4bn).
But with shares in major Chinese gold miners led by Zijin (SHA: 601899) rising back towards last spring's all-time highs, trading in mutual fund E-Fund Gold Theme Securities (LOF) was
suspended for the 7th time this month as the ETF's stock-market price rose 55.8% above the value of the assets it holds.
The fund issued 21 premium risk warnings between April and August last year, when surging prices relative to net asset value also saw trading in gold-related mutual funds including China AMC's CSI SH-SZ-HK Gold Industry Equity ETF suspended at premiums above 30%.
"The price of precious metals has fluctuated drastically recently," said
a notice issued Monday by the Shanghai Gold Exchange.
"All members are requested to enhance their awareness of risk prevention, continue to make risk emergency plans, and maintain the stable operation of the market.
"At the same time, investors are reminded to do a good job in risk prevention, reasonably control positions, and invest rationally."
Top 4 lender Bank of China today raised the minimum purchase size for retail customers using its gold accumulation plan for the 2nd time this month,
following a raft of competitors − and citing official guidance from the central bank − in taking it from ¥750 to ¥850.
Barely enough to buy 1 gram at Tuesday's benchmark wholesale price, that's almost 1/3rd of
the minimum monthly wage paid in Shanghai, the highest amongst all China's provinces.
"The recent sharp rise in international gold prices is more of an overreaction of investors to market panic and uncertainty," Chinese investment site STCN quotes Wu Zijie, precious metals researcher at brokerage Jinrui Futures Co.
"When the fundamentals stabilize, the risk of a price correction will also increase. For individual investors, they need to remain rational when the market is overheated and avoid blindly chasing the rise."
Washington-based think tank and lender the International Monetary Fund today cut its global GDP growth forecast for 2025 from 3.3% down to 2.8%.
The bulk of that change was thanks to "notable" upwards revisions to the IMF's inflation expectations in what it called a "reference forecast" given the "extreme complexity and fluidity of [this] new era as the global economic system that has operated for the last 80 years is being reset" by
Trump's trade-tariff policies.
"The tariff announcement, April 2, was definitely bigger than what they had been expressing," said Powell's colleague, Chicago Fed President Austan Goolsbee to CBS on Sunday.
"There's just a lot of question marks. We don't know 90 days from now, when they've revisited the tariffs, we just don't know how big they're going to be."
As for Trump's increasingly strident calls for Powell to slash interest rates or quit the Fed, "There's virtual unanimity among economists that monetary independence from political interference is really important," Goolsbee went on.
"And they came to that not as a theory, but
just by looking around the world at places where they don't have monetary independence. The inflation rate is higher, growth is slower, the jobs market is worse."
With spot gold in London erasing all of its early 2.4% surge towards $3500 per Troy ounce, the price of gold in Euros fell back to €2980 after peaking this morning at €3035.
The UK Pound gold price also erased all of last night's surge, dropping back to what was already a record on Monday at £2555 after peaking above £2600.
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