- Gold price regains positive traction on Thursday as rising trade tensions boost safe-haven demand.
- A modest USD pullback from a multi-week top and Fed rate cut bets also back the XAU/USD pair.
- Traders look to Thursday’s US macro releases for some impetus ahead of the US PCE data on Friday.
Gold price (XAU/USD) retreats slightly after touching a fresh weekly high earlier this Thursday and trades with modest intraday gains, just below the $3,030 level heading into the European session. An improvement in the global risk sentiment – as depicted by a turnaround in the US equity futures – turns out to be a key factor acting as a headwind for the precious metal. Apart from this, an uptick in the US Treasury bond yields further contributes to capping the commodity.
Meanwhile, the uncertainty over US President Donald Trump’s impending reciprocal tariffs on April 2 keeps investors on the edge. This, along with the growing acceptance that the Federal Reserve (Fed) will resume its rate-cutting cycle soon and a modest US Dollar (USD) pullback from a three-week top, remains supportive of the bid tone surrounding the Gold price. Traders now look forward to the US macro releases and the Fed speaks for some impetus later during the US session.
Daily Digest Market Movers: Gold price bulls have the upper hand amid trade jitters, renewed USD selling
- The global risk sentiment took a hit in reaction to US President Donald Trump’s new auto tariffs announced on Wednesday. Adding to this, the uncertainty over Trump’s impending reciprocal tariff next week weighs on investors’ sentiment and revives demand for the traditional safe-haven Gold price on Thursday.
- The uncertainty over the impact of Trump’s trade policies forced the Federal Reserve to revise its growth outlook downward. Moreover, the US central bank signaled that it would deliver two 25-basis-point interest rate cuts in 2025. This overshadows Wednesday’s upbeat US macro data and weighs on the US Dollar.
- In fact, the US Commerce Department reported that Durable Goods Orders rose 0.9% in February, while Core Durable Goods, which strips out the volatile transportation sector, increased by 0.7%. The readings were better than consensus estimates and led to the overnight USD move higher to a three-week high.
- Chicago Fed President Austan Goolsbee told the Financial Times that it may take longer than anticipated for the next cut because of economic uncertainty. If markets start factoring higher inflation then he would view that as a major red flag area of concern for policymaking decisions, Goolsbee added further.
- Adding to this, Minneapolis Fed President Neel Kashkari argued that the central bank has made a lot of progress in bringing inflation down, but will have more work to do to get inflation back to the 2% target. Kashkari also said that he is uncertain about the effect of Trump’s aggressive policies on the US economy.
- Separately, St. Louis Fed President Alberto Musalem said that there is no urgency for the US central bank to cut rates given the fact that restrictive policy is still needed to ensure inflation falls to the 2% target. He expects US economic growth to remain still decent, while prices may be pushed higher by tariffs.
- Traders now look forward to Thursday’s US economic docket – featuring the release of the final Q4 GDP print, Weekly Initial Jobless Claims, and Pending Home Sales data. This, along with speeches by influential FOMC members, will drive the USD demand and produce short-term opportunities around the commodity.
- The focus, however, will remain glued to the US Personal Consumption Expenditure (PCE) Price Index on Friday, which could provide some cues about the Fed’s future interest rate-cut path. This, in turn, will play a key role in determining the next leg of a directional move for the buck and the non-yielding yellow metal.
Gold price seems poised to climb further while above the $3,000 psychological mark pivotal support
From a technical perspective, the bullish resilience near the $3,000 psychological mark and the subsequent move up favor bulls amid broadly positive oscillators on the daily chart. Hence, some follow-through buying should allow the Gold price to aim back towards challenging the all-time peak, around the $3,057-3,058 region touched on March 20. A sustained strength beyond will set the stage for an extension of the recent well-established uptrend witnessed over the past four months or so.
On the flip side, the $3,020-3,019 horizontal zone might now protect the immediate downside ahead of the $3,000 psychological mark. This is followed by support near the $2,982-2,978 region, below which the Gold price could extend the corrective slide further towards the next relevant support near the $2,956-2,954 region. The latter represents a horizontal resistance breakpoint and should act as a key pivotal point, which if broken might prompt some technical selling and pave the way for deeper losses.
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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