Gold Stabilizes After Ceasefire Hopes, Trump’s Tariff Threats

Gold prices fluctuated on Tuesday, initially declining on news of a potential ceasefire deal between Israel and Hezbollah. However, the precious metal recovered some losses as U.S. President-elect announced plans to impose tariffs on Mexico and Canada.

Ceasefire Hopes Weigh on Gold:

A potential 60-day ceasefire deal between Israel and Hezbollah could reduce geopolitical tensions and decrease demand for safe-haven assets like gold.
Initial reports of the deal led to a significant sell-off in gold prices.

Trump’s Tariff Threats Boost Gold:

President-elect Trump’s threat to impose tariffs on Mexico and Canada increased market uncertainty and boosted demand for safe-haven assets, including gold.

The increased geopolitical tensions and potential trade war could lead to economic slowdown, which could benefit gold’s appeal as a hedge against inflation and economic uncertainty.

Technical Outlook:

Gold’s recent decline formed a Bearish Engulfing candlestick pattern, indicating a potential short-term reversal. Support for the precious metal lies at a major trendline near $2,630.
A break below this level could signal further downside potential.

As the geopolitical situation continues to evolve, gold prices are likely to remain volatile. Investors should monitor developments in the Middle East and any further announcements from the incoming U.S. administration for clues on the precious metal’s future direction.