- Gold hits yet again another fresh all-time high near $2,870 on Wednesday.
- Equities edge lower amid Asia reopening after Chinese New Year holidays.
- Gold extends rally for a five-day winning streak.
Gold’s price (XAU/USD) is shooting for the stars and rallies for a fifth consecutive day in a row on Wednesday, accounting for more than 2.5% of gains this week and hitting fresh all-time highs near $2,877. Softer economic data from the United States (US), which further supports the case for another rate cut from the Federal Reserve (Fed), together with quickly fading tariff fears, is lifting Gold to higher levels day by day.
On the economic data front, the calendar could become an additional tailwind for Gold to stretch even higher. This Wednesday, US Purchasing Managers Index (PMI) data for January will be released. A softer PMI print could be enough to set off Gold again to a new all-time high.
Daily digest market movers: Gold knows no limits
- Investors and traders are parking their cash under Gold, away from tech stocks, whilst being safe from the fresh lows in US yields as inflation concerns abate, Bloomberg reports.
- At 14:45 GMT, S&P Global will release the January final reading for the Purchasing Managers Index. The ISM Services PMI is expected to stay stable at 52.8.
- At 15:00 GMT, the Institute for Supply Management (ISM) will also release its PMI data for the Services sector as a whole:
- The PMI is expected to tick up to 54.3 from 54.1 in December.
- The Prices Paid component was at 64.4 last time and has no forecast.
- The CME FedWatch tool shows an 83.5% chance of keeping interest rate unchanged in the March 19 meeting, compared to 16.5% for a 25 basis points rate cut.
Technical Analysis: Unstoppable for now
Gold is on a tear again, and with China heading back into markets after the Chinese New Year holidays, expect to see a catch-up move in assets. With the Bullion rally heading into its fifth day on Wednesday, expect Chinese traders to try to catch up with it, meaning that any brief dip or pullback will be bought with interest. Since there are no reference levels that bear historic value anymore, the intraday Pivot Point levels are becoming increasingly important.
The Pivot Point level for this Wednesday is the first nearby support at $2,831. From there, S1 support should come in at $2,818, though it does not look the best. Instead, look for S2 support at $2,793, which roughly coincides with$2,790 (the previous high of October 31, 2024) as a more significant level.
On the other side, R2 resistance at $2,869 is the next level to watch, followed by the logic big figures such as $2,880 and $2,900. Further up, some analysts and strategists have already called for $3,000.
XAU/USD: Daily Chart
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
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