- Gold attracts buyers for the second straight day amid concerns about a global trade war.
- Bets that the Fed would cut rates further lend support to the non-yielding yellow metal.
- Rebounding US bond yields and a modest USD uptick do little to cap the XAU/USD pair.
Gold price (XAU/USD) builds on the previous day’s modest gains and scales higher for the second successive day on Tuesday. The commodity maintains its bid tone through the early European session and currently trades around the $2,913 region, up over 0.50% for the day. Worries that US President Donald Trump’s threatened reciprocal tariffs would trigger a global trade war continue to boost demand for the safe-haven bullion. Apart from this, bets that the Federal Reserve (Fed) would cut interest rates further lend additional support to the non-yielding yellow metal.
Meanwhile, the intraday uptick seems rather unaffected by a goodish pickup in the US Treasury bond yields and a modest US Dollar (USD) rebound from the lowest level since December 17, which tends to undermine the Gold price. Even the optimism over a delay in the implementation of US President Donald Trump’s reciprocal tariffs and talks aimed at ending the Russia-Ukraine war do little to hinder the bullish sentiment. This suggests that the path of least resistance for the XAU/USD is to the upside and supports prospects for a further near-term appreciating move.
Gold price remains supported by trade war fears; shruggs of modest bounce in US bond yields and USD
- US President Donald Trump threatened on Friday, saying that levies on automobiles would be coming as soon as April 2. This comes on top of Trump’s reciprocal tariff plans on countries that charge duties on US imports and continues to underpin the safe-haven Gold price.
- The disappointing release of US Retail Sales figures on Friday, along with mixed signals on inflation, suggests that the Federal Reserve could possibly cut rates at the September or October policy meeting. Fed Funds Futures see the possibility of a 40 basis point rate cut in 2025.
- Philadelphia Fed President Patrick Harker said on Monday that the labor market is largely in balance and the current economy argues for a steady policy as inflation has been sticky over recent months. Future Fed rate policy choices will be data-driven, Harker added further.
- Fed Board of Governors member Michelle Bowman noted that high asset prices may have impeded progress on inflation and more certainty is needed on declining inflation before reducing rates. Bowman added that wage growth above level is consistent with the Fed inflation target.
- Fed Board of Governors member Christopher Waller said that inflation progress last year has been excruciatingly slow and that rate cuts would be appropriate in 2025 if inflation repeats the 2024 pattern. Waller expects disinflation and interest rate cuts to resume year on year.
- The US Dollar attracts some buyers and for now, seems to have snapped a three-day losing streak to its lowest level since December 17. This might hold back traders from placing aggressive bullish bets around the XAU/USD and keep a lid on any further appreciating move.
- Traders look to the release of the Empire State Manufacturing Index from the US for some impetus later during the North American session. Apart from this, speeches by influential FOMC members would drive the USD demand and produce short-term trading opportunities.
Gold price needs to breakout through $2,925 trading range hurdle to support prospects for further gains
From a technical perspective, the range-bound price action witnessed over the past week or so could be categorized as a bullish consolidation phase against the backdrop of the recent rally to a record high. Moreover, oscillators on the daily chart are holding comfortably in the positive territory and suggest that the path of least resistance for the Gold price remains to the upside. That said, the daily Relative Strength Index (RSI) remains close to overbought territory. Hence, any subsequent move up is more likely to confront stiff resistance near the $2,925 horizontal zone. This is followed by the $2,942-2,943 area, or the all-time peak, which if cleared decisively will mark a fresh breakout and pave the way for an extension of a two-month-old uptrend.
On the flip side, weakness below the $2,900 mark now seems to find decent support near the $2,878-2,876 region. Any further decline towards the $2,860-2,855 area could be seen as a buying opportunity, which should help limit the downside for the Gold price near the $2,834 zone. A convincing break below the latter, however, might prompt some technical selling and drag the XAU/USD towards the $2,815 region en route to the $2,800 mark and the $2,785-2,784 support.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.17% | 0.10% | 0.26% | 0.02% | 0.00% | 0.41% | 0.09% | |
| EUR | -0.17% | -0.07% | 0.06% | -0.15% | -0.17% | 0.23% | -0.08% | |
| GBP | -0.10% | 0.07% | 0.17% | -0.08% | -0.10% | 0.30% | -0.01% | |
| JPY | -0.26% | -0.06% | -0.17% | -0.24% | -0.26% | 0.13% | -0.18% | |
| CAD | -0.02% | 0.15% | 0.08% | 0.24% | -0.02% | 0.39% | 0.07% | |
| AUD | -0.00% | 0.17% | 0.10% | 0.26% | 0.02% | 0.40% | 0.07% | |
| NZD | -0.41% | -0.23% | -0.30% | -0.13% | -0.39% | -0.40% | -0.31% | |
| CHF | -0.09% | 0.08% | 0.01% | 0.18% | -0.07% | -0.07% | 0.31% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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.