- Gold prices rose above 0.50% on Tuesday after Trump backed off on tariffs.
- President Trump has promised to keep tariff increases in place for Canada and Mexico on February 1st.
- Gold has reached a new two-month high of $2,732 and now faces stiff resistance at $2,790.
Gold’s price (XAU/USD) is rising for the second day this week in what has been a turbulent week so far, with US President Donald Trump declaring his intention to put 25% tariffs on Canada and Mexico as early as February, as well as duties on silver and gold. Bloomberg stated that China was not included in the immediate duties levied.
The likelihood of Trump imposing tariffs on silver and gold has created market uncertainty, driving futures premiums to high levels. The second primary driver is President Trump’s domestic agenda, which has the potential to extend Gold’s positive trend and enhance demand for safe-haven assets. Meanwhile, bond rates fell to 4.527% in Asian trading on Tuesday, after being closed on Monday for Martin Luther King Day.
Daily market movers: More Trump’s speech is expected
- President Donald Trump’s comments during the signing ceremony of his first executive orders surprised markets. During the session, Trump stated that tariffs on Canada and Mexico will be enforced as soon as February. The Canadian Dollar (CAD) and Mexican Peso (MXN) fell in response to the surprising announcement, as the Wall Street Journal had already published a piece on Monday stating that tariffs would be postponed until a task force was constituted, according to Bloomberg.
- According to Reuters, President Trump has indicated that universal tariffs on all imports into the United States are also being considered and will be implemented at a later date.
- Saudi Arabia’s investment mining fund is to purchase a stake in Pakistan’s Reko Diq project, which will be one of the world’s largest copper mines once completed, as the kingdom expands into the precious metal sector, according to the Financial Times.
- US yields are catching up to Monday’s happenings after being closed for Martin Luther King Day. The US 10-year benchmark fell to 4.527% before recovering at the start of the European session. The 10-year bond is still trading 5% lower from its top performance last week, at 4.788%.
Technical Analysis: Precious Metals Bid
Gold prices rose for the second day in a row on Tuesday, benefiting from US President Donald Trump’s selective steps to target Mexico and Canada while delaying China’s levies. While tariffs are typically viewed as a negative factor for precious metals, the prospect of tariffs on gold and silver is driving up prices. The Gold Tale appears to have not run its course.
Profit-taking might occur, pushing 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. If there is further loss, the 55-day Simple Moving Average (SMA) and the 100-day SMA, which are converging at roughly $2,646, should be monitored.
At the time of writing, $2,721, a type of double top in November and December, was being tested. If Bullion breaks through that level, the key upside hurdle is the all-time high of $2,790.
Why do individuals invest in gold?
Gold has played an important part in human history since it has long been utilized as a store of wealth and a medium of trade. Aside from its glitter and use in jewelry, precious metal is now commonly regarded as a safe-haven asset, which means it is a suitable investment during troubled times. Gold is also often recognized as a hedge against inflation and collapsing currencies because it is not dependent on any single issuer or government, making it an appealing option for FX solutions for proprietary trading firms trying to diversify their portfolios and manage risk effectively.