- As the White House clears up any uncertainty over the tariff timeframe, gold continues to rise, trading at $2,797.
- Gold briefly declines as a result of revised tariff announcements, with traders focusing on the $2,800 resistance level.
- Gold prices remain high due to geopolitical concerns, even in the face of stable December Core PCE statistics.
As market investors become more cautious following the White House’s correction of earlier Reuters reports that the United States (US) will not impose tariffs on Canada and Mexico on February 1 but would instead do so on March 1, the price of gold trades close to all-time highs around $2,800 on Friday. XAU/USD is up 0.15% at $2,797 as of this writing.
US Press Secretary Karoline Leavitt stressed that prior reports were incorrect and that 25% tariffs would be implemented on Canada and Mexico on Saturday, February 1. Additionally, she stated that Washington will impose 10% levies on Chinese imports.
The Greenback rose after the report, as gold pared some of its early advances above $2,800. It may be possible to book profits ahead of next week’s US Nonfarm Payrolls report because Bullion failed to produce a daily close above the latter.
The United States was scheduled to implement duties until March 1, according to a previous Reuters story. Trump would propose tariffs that contain a procedure for the nations to request exemptions on specific imports, the newspaper noted.As anticipated, the Fed’s favored inflation indicator, the Core Personal Consumption Expenditures (PCE) Price Index, rose in December and surpassed the November figure. On an annual basis, Core PCE, however, did not vary from the earlier numbers.
The data follows the Federal Reserve’s most recent monetary policy meeting and weak Q4 GDP numbers. Fed officials have started speaking in public, with Chicago Fed President Austan Goolsbee and Governor Michelle Bowman offering their perspectives on the state of the economy.
Daily digest market movers: news about US tariffs lead to gold price gains
- The price of gold continues to grow in spite of the increase in US Treasury yields. At 4.571%, the yield on the US 10-year T-note increases by six basis points. The 10-year Treasury Inflation-Protected Securities (TIPS), which gauges US real yields, increased seven basis points to 2.146% in tandem.
- As anticipated, the US Core PCE gained 2.8% year over year in December, while monthly inflation rose 0.2% from 0.1% in November.
- By stressing that inflation risks are still skewed to the upside, Fed Governor Michelle Bowman upheld her hawkish position and strengthened the US dollar. She emphasized that rate decreases would be data-dependent and probably gradual, but she did not rule them out.
- According to the December inflation report, Chicago Fed President Austan Goolsbee said he is confident that inflation is moving closer to the 2% target.
- With traders expecting the first move in June, money market futures currently factor in 50 basis points of Fed rate decreases in 2025.
Technical outlook for XAU/USD: Bulls in the gold price are lurking around $2,800
With bulls eyeing higher prices like the $2,850 milestone, gold’s uptrend has recovered strength and surged to a record high of $2,817 earlier. Buyers may target the latter, then $2,900, and finally the $3,000 mark in the event of a sustained rally.
On the other hand, before the golden metal drops toward $2,700, sellers need to break through the swing low of $2,730 on January 27. The intersection of the 50- and 100-day Simple Moving Averages (SMAs) from $2,666 to $2,671 would be the next halt if it were surpassed.
In order to bolster negative outlooks toward $2,700, sellers would have to force XAU/USD below $2,750. With the 50-day and 100-day Simple Moving Averages (SMAs) convergent around $2,663, a break below that level may pave the way for more losses.
How is Gold correlated with other assets?
The US dollar and US Treasuries, two important reserve and safe-haven assets, are inversely correlated with gold. Gold typically rises when the dollar depreciates, allowing central banks and investors to diversify their holdings during volatile periods. There is also an inverse relationship between gold and risk assets. Sell-offs in the risk markets generally tend to support the precious metal, while a stock market rally tends to depress the price of gold. Through the use of prop trade tech, traders can more effectively analyze these market dynamics, identify trends, and execute strategies to take advantage of the relationship between gold and risk assets.