- At the beginning of this week, we saw strong fluctuations in the price of gold, with a rise towards the resistance level of $2650 per ounce.
- That followed reports in financial markets that Trump would ease the pace of his tariffs, and then the gold price index quickly retreated to a support level of $2,614 an ounce.
- Apparently, this came after Trump personally denied such reports.
- The price of gold recovered in early trading on Tuesday, stabilizing around the resistance level of $2,646 an ounce. Important market catalysts are expected, including the release of US jobs data and minutes from the Federal Reserve’s latest meeting.
The gold market will follow the policy of the US central bank
Currently, investors will focus their attention cautiously on headline US labor market data and the minutes from the Federal Reserve’s latest monetary policy meeting, which may impact US interest rate expectations. On a related note, comments by Federal Reserve Governor Lisa Cook reinforced the US central bank’s cautious approach to interest rate cuts, pointing to a resilient labor market and persistent inflation. This could negatively impact bullion prices, as higher interest rates weaken the appeal of holding non-yielding assets. However, spot gold prices continue to be supported by ongoing geopolitical tensions and strong buying demand from central banks.
US dollar reacts to tariff reports
The U.S. dollar pared its sharp decline against most major currencies in after-market trading after Donald Trump denied a report that his tariff plans would not be as broad as initially feared. As a result, the U.S. dollar index ( DXY ) fell more than 1%, its biggest daily drop in more than a year, following a report in the Washington Post that Trump aides were exploring a tariff plan covering only basic imports.
As a result, the euro found an opportunity to gain 1.2% against the US dollar, its biggest daily gain since August 2024, and the pound also gained 1%. Meanwhile, before currency prices returned to the levels they were at prior to the release of these reports.
The US dollar benefited from expectations that Trump would impose tariffs on major US trading partners, hurting currencies including the yuan and euro. Moreover, a tariff program covering only key sectors such as the defense supply chain would have a less severe impact on the global economy and inflationary pressures in the US than a program covering a wider range of imports, meaning the dollar has room to fall.
Performance in US dollars will await important data
Currently, the US dollar price will remain stable until investors and financial markets react to the release of US non-farm payrolls to gather more evidence on the prospects for a cut in US interest rates. Relatedly, traders added to bets on US monetary easing after the tariff report, pricing in around 40 basis points of Fed tapering in 2025 compared with 38 basis points earlier.
Trading Tips:
Gold will remain on an upward trajectory and watch closely for any chance of a price drop to buy, but risk-free.
Gold price technical analysis and expectations today:
According to the daily chart above and according to today’s gold analyst forecasts, the bulls are trying to push the price of gold towards the psychological resistance of $2,700 an ounce, which could stimulate strong gold buying and thus prepare for new record highs. Technically, a move towards this high requires a move first towards the resistance levels of $2666 and $2685 per ounce. Volatility indicators, relative strength index and MACD, are currently in a neutral position, which means a relative balance between bears and bulls. Events and data this week will provide an opportunity for one of them to take off.
Keep a close eye on any opportunity for gold prices to fall to consider buying again. Moreover, risk-free and activate take and stop loss orders to ensure the safety of the trading account from any sudden sharp price reversals. Currently, the closest support levels for gold prices are $2625, $2605 and $2585 per ounce.
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