- Gold jumps higher for a third straight day in a row and hits a new all-time high on Wednesday.
- US President Donald Trump blamed Ukraine and committed again to several tariffs.
- Technically, Tuesday’s daily close above $2,910 worked, boosting the Gold price to a fresh all-time high.
Gold’s price (XAU/USD) sees its winning streak going forward this week and hits a fresh all-time high at above $2,945 during the European trading session on Wednesday. The up-move comes after United States (US) President Donald Trump’s harsh words on Ukraine overnight, just hours after first talks between the US and Russia officials raised concerns among traders if a peace deal is even in the cards. Meanwhile, President Trump confirmed again that 25% tariffs on automobile imports are coming, extending to pharmaceutical and semiconductor imports in addition.
Meanwhile, the Federal Reserve (Fed) is set to release the Federal Open Market Committee (FOMC) Minutes for the January meeting. This could throw a spanner in the works for Gold, as several Fed officials have said in recent weeks that rates are reasonable where they are while some inflationary forces are enough for renewed concerns.
Daily digest market movers: Tariffs broadening
- At 19:00 GMT, the Fed will release its January FOMC Minutes.
- Late Tuesday, US President Donald Trump pledged to impose tariffs on automobiles, semiconductors, and pharmaceutical imports of around 25%, Bloomberg confirmed.
- Turkish Gold miner Koza Altin aims to produce more than 40 tons of Gold in the next five years, the company says in an exchange filing after the market closed on Tuesday, Bloomberg reports.
- The US 10-year benchmark is trading at the high of this week, near 4.56% at the time of writing.
Technical Analysis: Fed to be reason for concern
Gold is playing a dangerous game on Wednesday after reaching a fresh all-time high above $2,945. With the Fed Minutes for the January meeting being released later in the day, risk is building for an event that might push Gold back lower. From a technical point of view, this could be considered a rejection at the all-time high and might see sellers drive prices further down.
The daily Pivot Points have been reshuffled. The first support is seen at $2,921, which is the daily Pivot Point. It has already served as support during the Asian trading session. Should this level come under threat again, the S1 support at $2,906 could do its duty.
On the upside, the R1 resistance at $2,951 is the first barrier. The R2 resistance at $2,966 is the next level to be reached before considering the $3,000 mark.
XAU/USD: Daily Chart
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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