Gold price rose for the second successive day on Tuesday as traders remained cautious over tariff pronouncements by US President Donald Trump. The yellow metal hit ten-week highs of $2,733 at the spot market and was up by 0.7% on the daily chart at the time of writing. The prospect of a protracted tariff war remains in play after Trump announced that tariffs against Canada and Mexico could come as soon as February 1st.
Analysts opine that US tariffs will definitely come, but the question is when and what percentage they will be raised by. This sentiment is likely to keep gold prices on the ascending trajectory in the coming days, with a keen focus on China-US trade relations. However, the commodity has lost geopolitical risk premium after Israel and Hamas agreed a ceasefire deal, with hostage exchange already underway.
Also, the prospect of higher-for-longer interest rates in the United States could limit the XAUUSD upside. Elsewhere, yields on benchmark 10-year US treasury bonds were down by 5.1 basis points and stood at 4.56% at the time of writing, the lowest in three weeks. That adds support for non-yielding gold in the near term.
In the medium-term, central banks are likely to increase their gold purchases as a precaution against the impact of tariff wars. China made a return to the market last month and a continuation of the trend in January could keep gold price on the uptrend.
Gold price pivots at $2,720 and the momentum favours the continuation of the upside. With the buyers in control, look for the first resistance at $2,735. Breaching that barrier will clear the path to test the second resistance at $2,740. On the other hand, the momentum will swing to the downside if the price goes below $2,720. That will likely establish the first support at $2,715. Also, breaking below that level will invalidate the upside narrative. However and extended control by the sellers could clear the path to test $2,710.
This post was last modified on Jan 21, 2025, 14:01 GMT 14:01