The decline of the Nasdaq continued on Monday and carried into trading on Tuesday morning (March 11, 2025). Interestingly, the price of Gold also fell, despite the fact that these two assets typically exhibit opposing characteristics. The movement of the Nasdaq, which is tied to stock prices, is considered a risky asset, while Gold is viewed as a safe haven. Thus, their short-term movements generally trend in opposite directions.
During trading on Monday, the Nasdaq dropped by 727 index points, and this morning it further decreased by 241 index points to reach 19,230. This marks the lowest level seen in the past six months.
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In contrast, Gold saw a decline of over US$ 20, or 200 pips, at the beginning of last week, dropping to US$ 2,889.14 per troy ounce, and continued to decrease this morning to US$ 2,882.29 per troy ounce.
The slump in the Nasdaq is attributed to the “Trumpcession,” referring to the potential recession in the United States triggered by President Donald Trump’s policies. The imposition of higher import tariffs, which has ignited a trade war, is causing concern among market participants.
It is noteworthy that from 2018 to 2019, the United States was engaged in a fierce trade war with China, which led to an economic slowdown in both countries and impacted the global economy. Currently, the United States may be on the brink of entering trade disputes with multiple countries, increasing the risks of an economic slowdown.
Signs that the GDP of the United States may experience a contraction in the first quarter of 2025 have already emerged, as indicated by the GDPNow data from the Atlanta Fed.
On March 6, GDPNow projected that the U.S. GDP for Q1 2025 would be -2.4%. This model provides a real-time estimate of U.S. economic growth in response to the latest economic data releases, which means adjustments occur frequently. The latest data will be published on March 17.
The risk of a U.S. GDP contraction would typically be favorable for Gold due to its safe haven status. However, the reality has been a decrease in Gold prices, possibly due to profit taking following significant gains earlier in the year.
Additionally, the U.S. dollar is still under pressure, as indicated by the declining USDJPY pair. The EURUSD is climbing this morning after showing little movement at the start of last week. Similarly, GBPUSD is rebounding this morning following a profit taking phase. The forex market has experienced high volatility since last week, and this trend is expected to continue today.
