There's a common misconception with gold. People think it's a safe haven in crises times. History suggests otherwise though. If you look back at the most recent recessions, you will notice that gold sold off alongside the stock market. It's not a protection against a market selloff.

When there's a tightening in financial conditions stemming from an aggressive stock market selloff, widening credit spreads and recessionary fears, then all correlations go to one.

The best times for gold is when the central bank cuts interest rates and the market prices in better growth ahead. The absolute best time though is during stagflationary expectations. We had those in the past weeks but they got crushed after the tariffs announcement as it was so bad that the expectations switched to price in a recession.

We are now having a tightening in financial conditions and this is going to weigh both on growth and inflation despite the expectations of more inflation from tariffs. In fact, market-based inflation expectations are going down now.

The risk of more inflation could come only if the central banks start to ease aggressively and the current tariffs remain in place (in this case, gold will rally). If central banks don't ease fast and the markets continue to sell off, then we will just get a recession and potentially deflation which is a byproduct of such crises (in this case, gold will collapse).

Source: Forex Live