- Gold price attracts some intraday sellers amid some repositioning ahead of Trump’s tariff announcement.
- A broadly stable risk sentiment holds bulls from placing fresh bets around the safe-haven XAU/USD pair.
- Fed rate cut bets, subdued USD demand and rising trade tensions could lend support to the yellow metal.
Gold price (XAU/USD) struggles to capitalize on modest Asian session gains and retreats to the lower end of the daily range in the last hour, though it manages to hold above the $3,100 mark. A stable performance around the Asian equity markets and overbought conditions on the daily chart might hold back bulls from placing fresh bets around the precious metal. Moreover, investors opt to wait on the sidelines ahead of US President Donald Trump’s reciprocal tariffs announcement later today.
In the meantime, the uncertainty over Trump’s trade policies and their impact on the global economy might continue to act as a tailwind for the safe-haven Gold price. Meanwhile, the growing acceptance that a tariff-driven US economic slowdown would force the Fed to resume its rate-cutting cycle soon keeps the US Dollar (USD) bulls on the defensive. This should contribute to limiting the downside for the non-yielding yellow metal and support prospects for the emergence of some dip-buyers.
Daily Digest Market Movers: Gold price bulls opt to wait for Trump’s tariffs before placing fresh bets
- Investors remain worried about the potential economic fallout from US President Donald Trump’s trade policies, which assists the safe-haven Gold price to regain positive traction following the overnight pullback from a fresh all-time peak.
- The recent US macro data pointed to still sticky inflation and slowing economic growth, implying that the economy could be heading towards stagflation, which might force the Federal Reserve to resume its rate-cutting cycle in June.
- The concerns were fueled by the disappointing US ISM Manufacturing Purchasing Managers Index (PMI) on Tuesday, which fell from 50.3 to 49 in March and indicated that business activity contracted for the first time in three months.
- The report also revealed that inflation at the factory gate jumped to the highest level in nearly three years and the Employment Index highlighted a decrease in the sector’s payrolls at an accelerating pace during the reported month.
- Adding to this, the Job Openings and Labor Turnover Survey (JOLTS) showed that the number of job openings on the last business day of February stood at 7.56 million, down from 7.76 million reported in the previous month.
- According to the CME Group’s FedWatch Tool, the markets are currently pricing in the possibility that the Fed would cut rates by 80 basis points this year, undermining the US Dollar and further benefiting the non-yielding yellow metal.
- Asian equity markets tracked the overnight gains on Wall Street, which, along with overbought conditions, might hold back the XAU/USD bulls from placing fresh bets ahead of Trump’s impending reciprocal tariffs announcement.
- In the meantime, the release of the US ADP report on private-sector employment and Factory Orders data might influence the USD, which could provide some impetus to the precious metal later during the early North American session.
Gold price technical setup supports prospects for emergence of dip-buyers near $3,100 pivotal support
From a technical perspective, the overnight pullback from the all-time peak stalled near the $3,100 mark and the subsequent move up favors bullish traders. That said, the daily Relative Strength Index (RSI) stands well above the 70 mark and points to overbought conditions, making it prudent to wait for some near-term consolidation or a modest pullback before positioning for any further gains. Nevertheless, the constructive setup suggests that the path of least resistance for the Gold price remains to the upside.
In the meantime, the $3,100 round figure might continue to protect the immediate downside and act as a key pivotal point. A convincing break below, however, might prompt some long-unwinding and drag the Gold price below the $3,076 area, or the weekly swing low touched on Monday, towards the $3,057-3,058 resistance breakpoint. The downward trajectory could extend further toward the $3,036-3,035 support zone en route to the $3,000 psychological mark, which should act as a strong base for the XAU/USD.
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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