Gold price surged, buoyed by safe-haven demand, as the market reacts to US President Donald Trump’s confirmation of a 25% tariff on imports from Canada and Mexico, set to take effect in February. Additionally, discussions about tariffs on Silver and Gold have added to market volatility, further supporting Gold prices. Notably, China has been excluded from these initial measures, as reported by Bloomberg.
Gold Prices Rise on Trade Tensions
The announcement of potential tariffs on Silver and Gold price surged has injected uncertainty into global markets, driving premiums on Gold futures to elevated levels. Trump’s domestic agenda, including these tariff policies, is expected to sustain Gold’s bullish momentum and increase demand for haven assets. Meanwhile, US bond yields fell to 4.527% during Asian trading on Tuesday after the Martin Luther King Day holiday.
Market Highlights
Daily Digest: A sequence of events influenced market dynamics:
- Tariff Imposition: Trump’s decision to enforce tariffs on Canada and Mexico as early as February led to sharp declines in the Canadian Dollar (CAD) and Mexican Peso (MXN). Previously, media reports had suggested a delay in implementing tariffs pending the formation of a task force.
- Universal Tariffs in Consideration: Trump mentioned that universal tariffs on all imports to the US might follow at a later stage, according to Reuters.
- Saudi Arabia’s Mining Expansion: The kingdom’s mining fund plans to invest in Pakistan’s Reko Diq Copper project, one of the world’s largest mines, as reported by the Financial Times.
Technical Analysis of Gold
Gold prices are advancing for the second consecutive day, benefiting from targeted measures against Mexico and Canada while delaying tariffs on China. While tariffs often pose challenges for precious metals, the possibility of levies on Gold and Silver has lifted prices.
- Support Levels: Gold’s price may face profit-taking, with a potential pullback to $2,700. Key support lies near $2,668, marked by the downward-sloping trendline of a previously broken pennant chart pattern. Further support resides at the 55-day and 100-day SMAs near $2,646.
- Resistance Levels: Currently, Gold is testing $2,721, which served as a double top in November and December. If it breaks past this level, the all-time high of $2,790 becomes the next significant resistance.
What Lies Ahead?
Gold’s trajectory remains influenced by geopolitical and economic factors, including ongoing tariff discussions and broader market sentiment. Investors are advised to monitor developments closely and consider safe-haven assets in times of uncertainty.
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