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Gold Gains Momentum Amidst Trade Tensions
Overnight remarks from President Trump regarding incoming tariffs have been sufficient to drive gold prices higher. As the focus of tariffs shifts towards China and Europe, gold has shown strength for the third consecutive day. Trading at a new two-month high, gold is setting its sights on an all-time high of $2,790.
Continued Rally and Market Focus
Gold’s price (XAU/USD) continued its rally on Tuesday, achieving gains of over 1.20%, with positive expectations for further gains on Wednesday. The bullish momentum is primarily driven by President Trump’s comments on tariffs, particularly a 10% levy on Chinese goods, which provided a significant boost to bullion prices.
Meanwhile, investors remain attentive to the broader implications of the Trump administration’s tariff and tax cut policies. These policies could potentially strain the nation’s finances and trigger an inflation boom, which might limit the Federal Reserve’s ability to ease monetary policy. Typically, higher borrowing costs pose a challenge for bullion due to the correlation between the two assets.
Daily Digest: Market Movers and Silent Fed
Zimbabwe Gold Exports**: Zimbabwe’s gold exports rose to $1.44 billion last year from $1.22 billion in 2023, as reported by the Reserve Bank of Zimbabwe, according to Bloomberg.
Silver Futures Spike: Following Trump’s comments on tariffs for China, Mexico, and Canada, silver futures briefly spiked. Mexico, being the top miner of silver, faces uncertainty regarding the applicability of these tariffs to metal imports, reports Reuters.
US Treasuries: US Treasuries remain under pressure, with the 10-year benchmark trading at 4.56%, close to its yearly low of 4.528% seen on Tuesday.
Technical Factors: Future Projections for Gold
Gold is currently in a strong position, but this could change quickly once US inflation data is released. If inflation indicates a resurgence in price pressures, gold traders might take profits, leading to a potential decline in gold prices. For now, traders can enjoy the rally, but they should remain cautious of potential shifts.
Profit-taking could push gold’s price back to $2,700, with the downward-sloping trendline of the broken pennant chart pattern last week at $2,668 serving as the next support level. If further downside occurs, the 55-day Simple Moving Average (SMA) and the 100-day SMA, both converging around $2,649, will be key levels to watch.
Gold is on its way to reaching $2,790, still over 1% above current levels. Once this level is surpassed, a fresh all-time high will be within reach. Some analysts and strategists are even predicting a rise to $3,000, but $2,800 appears to be the next significant resistance level on the upside.
