- Summary:
- Investors remain skeptical over the potential impact of tariffs on the economy, adding to macroeconomic factors favouring gold price upside.
Gold price rose to twelve-week highs on Friday as investors remained cautious on the US dollar amid uncertainty over a potential tariff war. The yellow metal has risen by 2% in the last five sessions and is up by 5% year-to-date, underlining a strong demand . For context, gold price rose by 30% in 2024.
Gold Price Primed for Further Gains
The US dollar received some support after the S&P Global Manufacturing PMI and Existing Home Sales data exceeded forecast estimates. The former printed out at 50.1%, beating analysts’ forecast 49.1%. Similarly, the latter was at 4.24 million homes against the forecast figure of 4.19 million.
Despite the latest US macroeconomic data providing support for the dollar, concerns over brewing tariff wars weighed down on the greenback. Speaking at the World Economic Forum in Davos, US President Donald Trump reiterated his stance that China’s trade surplus against the US was unfairly skewed, raising the prospect of tariff measures as early as February.
Furthermore, Trump stated that US tariffs could draw in allies like Canada and the European Union. The resulting sentiment favours an increased safe haven demand for gold in the coming days. Meanwhile, yields on benchmark 10-year US treasury bonds were down by 2 basis points to 4.615, adding support for continued gains by gold price.
Gold Price Prediction
Gold price pivots at $2,765 and the momentum calls for further upside. With the buyers in control, XAUUSD will likely move to the first resistance at $2,785. The commodity could break above that level and test the second resistance at $2,795.
On the other hand, the momentum will shift to the downside if gold price breaks below $2,765. If that happens, it it will likely find immediate support at at $2,755.However, an extended downward momentum will break below that level and could send the metal ower to test $2,745.
