The latest rise in the price of gold, and a fall by copper after U.S. President Donald Trump lifted the lid on a basket of tariffs, are two measures of what financial markets think of his obsession with tariffs, a proven instrument of economic harm.

A 3% fall yesterday on the New York Stock Exchange shifted the U.S. market into correction territory, down 10% since the high reached just three weeks ago, another indication that an economic crisis is brewing.

Australia, which was sideswiped rather than hit head-on by Trump, got off lightly with the all ordinaries index down 1% yesterday, taking its fall for the week to 1.5%, an encouragingly modest move compared with other markets.

The other item of good news for Australia is that Trump’s tariffs and their effect on global growth is expected to accelerate interest rate cuts by the Reserve Bank, with economists tipping up to four cuts of 0.25% each by the end of the year, music to the ears of the Prime Minister, Anthony Albanese, as he heads to the May 3 federal election.

Gold, however, was singing a different tune in its role as the ultimate measure of fear in financial markets. It rose by US$125 an ounce this week to hit another all-time high of US$3162/oz before easing to US$3150/oz, taking its gain since Trump was elected last November to US$490/oz, up 18.5% in five months.

Copper, a metal with well-established economic forecasting credentials because it is has such widespread industrial uses, lost US20c a pound immediately after Trump unveiled his multi-layered tariffs to trade around US$4.88/lb, still a handsome price but one which is trending down as concern grows about a global economic slowdown.

Steep falls on stock markets are also a strong indication that investors are in for a wild ride as Trump tries to change the way the world works but also making it hard for himself by attacking friends enemies as well as enemies.

Countries in the Asia Pacific region have been hit hardest by Trump’s tariff attack with China, Australia’s leading trade partner, singled out for an extra 34% tariff (on top of an existing 20%) on exports to the U.S. with the combined 54% likely to damage Australian raw material exports to China, which is Trump’s primary tariff target.

The 3% fall on New York stock market is a good example of the how investors see what’s happening as being deeply negative, though perhaps not as bad as it could have been after early talk in the U.S. indicated a base tariff rate of 20% rather than the 10%.

Deciphering what it means will take weeks to work out, and perhaps not even then because of Trump’s capacity for abrupt changes, a negotiating technique designed to unbalance an opponent on the other side of a deal.

The good news for Australian investors is that gold has kept a fire burning in the local market.

Goldman Sachs, a leading investment banks, sees a gold price target of US$3300/oz, slightly less than the US$3496/oz seen by RBC Capital Markets, by the end of the year.

Encouraging as those price forecasts might be, there are reasons for investors to treat gold with caution, if only because everyone knows that nothing rises forever – to which can be added that Trump will not be President forever, and perhaps not as powerful after next year’s mid-term election in the U.S. where polls are already turning against him.

Citi, another investment bank, ran hot and cold for gold this week, firstly with a calculation that the gold price today represents a “once in 40-year gift for gold producers”, a way of saying that gold miners have never had it so good.

But after that came a reminder that anything which goes up quickly can come down just as fast.

“Gold can push higher near term,” Citi said. “With the caveat that anomalies don’t last.”

RBC said in a midweek note to clients that “uncertainty has a Midas touch”, to which the bank could have added that Trump’s middle name should be Uncertainty.

The mixed signals from financial markets (gold up, copper down) are starting to be felt in the core of the U.S. economy, a place which is also Trump’s base of mainly blue collar workers. It’s those people who will feel the pain of his tariffs, and soon.

Hints of a shift in the U.S. political and economic winds could be heard last week. First in a sharp increase in voter support for Trump’s Democratic Party rivals, and then in a gloomy report from the Institute of Supply Management which said business conditions where “deteriorating quickly”.

The pace at which the changes are rolling through financial markets is both pleasing, when prices are going up, and concerning that targets are being constantly revised because they have been reached too quickly.

Citi’s mid-week gold research note is an example of the stampede with one of the sector leaders Evolution starting week at $7.08 (a hefty $1.08 above Citi’s $6 price tip at the time), before the stock ran up to $7.29 — $1.29 above Citi’s revised $7 price forecast from the bank for Evolution.

Too far, too fast, is the story with Evolution which actually ended down 2c this week at $7.12 even as the gold price hit its mid-week all-time high.

Other gold moves and news this week included:

  • Rox Resources rising by 5c to 38c after reporting fresh high-grade hits at its Youanmi project in WA with a best intersection of 10.9 grams of gold per tonne over 5.72 metres from a depth of 285.4m.
  • OzAurum, up 3.3c (50%) to 10c after reporting assays up to 4.26g/t over 12m from a depth of 18m at in Mulgabbie project in WA.
  • Medallion Metals, up 3.5c to 26c after reporting high-quality assays from drilling at its Ravensthorpe project in WA with hits as high as 20.2g/t over 6.5m from a depth of 139.2m. Analysts at Morgans see Medallion rising to 41c.
  • Northern Star swam against the rising tide with a fall over the week of 9.5c to $18.42, well short of the $22.25 target price of Bell Potter, a tip which was up $2.25 on the broker’s previous prediction of $20.
  • Catalyst Metals, up 33c to $5.76 after last week’s deal to sell the Henty mine in Tasmania to focus on the Plutonic region in WA. Catalyst has now doubled over the past four weeks, and
  • Pantoro was on the receiving end of a sell tip from Bell Potter after its 75% upward run this year from 9c to 16c with the broker saying sell and setting a price target of 14c.

With so much focus on gold most of sections of the market struggled for clear air as well as being burdened by the uncertainties associated with Trump.

Copper’s fall is a case study, having been artificially boosted by speculative trading ahead of this week’s tariff announcement, copper is now slipping back to trading on the fundamentals of supply and demand.

Sandfire, a local copper favorite, fell by $1.36 (12%) to $9.61. Hot Chili was down 18c (25%) at 51c, and Aeris slipped 1c lower to 19c, well below Bell Potter’s target of 33c.

Other market moves in a week overloaded with news included:

  • Fortescue down $1.20 (7%) to $15.04, but only after hitting a 12-month low of $14.87 as concern grows about the effects on Chinese demand for iron ore as U.S. tariffs bite.
  • Mineral Resources, which is also exposed to Chinese iron ore demand, dropped by $3.77 (15%) to $21.49, close to a 12-month low.
  • Liontown led a lithium sell off with a 16c (24%) plunge to 51c. German focused Vulcan incurred a more modest sell-down of 60c to $4.41, and
  • Paladin Energy and Boss Energy were hit by a wave of uncertainty which washed over the uranium market, shedding $1.12 to $4.51 and 31c to $2.19 respectively, though Macquarie Bank reckons Boss will move back up to $4.50.