- Gold comfortably drives above $2,900 halfway through the European trading session on Tuesday.
- Any headline out of Saudi Arabia from US or Russian officials could move markets.
- Going forward, a daily close above $2,910 could put Gold on track for a new all-time high this week.
Gold’s price (XAU/USD) is holding on to 0.50% gain this Tuesday in the European trading session, trading around $2,910 at the time of writing. In markets, US yields are catching up on events after the US President’s Day holiday on Monday. Still, Gold is in favor of traders as a safe haven for tariffs and geopolitical uncertainty.
Meanwhile, Federal Reserve Bank (Fed) President of Philadelphia Patrick Harker advocated on Monday night for the central bank to keep interest rates unchanged. He pointed out that recent inflation reports and gauges are not tracking economic changes that are currently taking place. Federal Reserve Bank of San Francisco President Mary Daly and Federal Reserve Vice Chair for Supervision Michael Barr will speak later this Tuesday at 15:20 GMT and 18:00 GMT, respectively.
Daily digest market movers: Fresh call for $3,100
- Goldman Sachs raised its year-end gold target to $3,100 an ounce due to central bank buying and inflows into bullion-backed exchange-traded funds, Reuters reports.
- Gold shipments from Singapore to the US climbed to the highest level in almost three years in January, a further sign of the ructions in bullion trading after pricing disparities opened up in key markets. Gold shipments from Singapore to the US reached 11 tons in January, up 27% from December, Bloomberg reports.
- The US administration has asked European nations to explain what security guarantees they’re willing to provide to Ukraine as part of a peace deal. The move followed United States (US) President Donald Trump’s push to begin talks with Russian President Vladimir Putin.
- Investors are still analyzing more details of the US reciprocal tariff plans, which could take months to implement due to their complexity. Trump’s trade policies have become increasingly muddled due to delays and exclusions, with concerns about the impact on the global economy aiding bullion’s role as a store of value.
Technical Analysis: Cautious upwards
Gold is climbing the ladder again this week, that stairway to new all-time highs. However, the Relative Strength Index (RSI) indicator in the daily chart is starting to flash overbought signals again, warning that the price action is overheating. With these elevated levels in RSI, buyers could be reluctant to buy more and wait for the Gold price to cool down to better levels before buying.
After Monday’s not-so-big move, the daily pivots have been reshuffled and are moving closer together. The first support is seen at $2,893, which is the daily Pivot Point. It has already served as support during the Asian trading session. Should this level come under threat again on Tuesday, the S1 support at $2,881 could do its duty.
On the upside, the R1 resistance at $2,909 is being reclaimed at the time of writing. A daily close above this level would be a healthy bullish signal for more upside into Wednesday. The R2 resistance at $2,921 is the next level to be recovered before considering a fresh all-time high, currently at $2,942.
XAU/USD: Daily Chart
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
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