Gold (XAU/USD)Gold prices retreated from a high of USD 3,360/oz after President Trump postponed the start of his proposed 50% tariff on EU imports, setting a new deadline of 9 July. Trade developments later in the week were not supportive either. The US Court of International Trade blocked Trump’s reciprocal tariffs, deeming them illegal and adding to trade uncertainty. This helped the USD regain strength above the 100 level, making gold more expensive for non-USD investors. A rebound in US consumer confidence also lifted risk-on sentiment, weighing on gold’s haven appeal.Trade flows of physical gold are reversing, as the spread between futures and London spot prices narrowed following the exemption of gold and silver from US tariffs.Flows have shifted out of the US back to other trading hubs. Notably, Switzerland’s gold imports from the US rose to 62t in April, the highest since 2012. These imports are expected to be refined into 100oz bars and eventually flow into the London market. At the same time, Swiss exports to the US normalised to 13t, down from a peak of 192t in January. While further outflows from the US are likely after a significant front-loading in Q1, we believe this will have a limited impact on the price.Investment demand has softened from the high in April. ETF holdings have declined by 55t since their late-April peak, and tactical net-long positions have dropped to a 14-month low. With lean investor net-long positioning, the risk of a material liquidation at the current price appears limited.Given that trade-related uncertainty drove gold’s rally this year, a price retracement amid easing trade tensions looks normal. Still, structural issues, like waning trust in US assets due to its debt issues, geopolitical uncertainty, concerns over economic growth and equity market volatility will encourage investors to diversify risk by adding defensive assets like gold in portfolios.