Gold prices settled near record lows on Tuesday, with spot gold holding above $3,140, awaiting traders for crucial political developments from Washington. The yellow metal hit an all-time high of $3,148.88 earlier in the week, and its breakout of $3,149.09 will confirm the continuation of the uptrend, without any immediate resistance above it.
Gold/USD is trading at USD$3,119.31, up $4.835 or +0.16%.
Tariff risk boosts demand for safe havens
Investors are cautiously watching the situation ahead of US President Donald Trump’s expected announcement of new tariffs, an event he has touted as “Liberation Day”. Markets fear that large-scale tariffs on countries with multiple trade tensions could hamper global growth.
Gold, long seen as a hedge in times of economic and geopolitical tensions, has risen in price by more than $400 since Trump took office, asserting its safe-haven role. Han Tan of Excenity Group noted that if the new tariff measures raise fears of stagflation or recession, gold could rise again.
Technically, the simple range between $2,999.46 and $3,149.09 sets the fulcrum level at $3,074.28. This level represents the first downside target if the momentum stops. A drop below $2,999.46 will reverse the near-term downtrend, which could spur a pullback towards the 50-day EMA at $2,925.44, which remains a key support level.
Macroeconomic and Federal Reserve policy data in the spotlight
Traders are also keeping a close eye on upcoming US economic data. The ADP Private Sector Jobs Report and Friday’s nonfarm payrolls data could provide fresh signals about labor market strength and weigh on expectations for the Federal Reserve’s next move.
Gold nears record high before tariffs
Gold rose towards a record high as US President Donald Trump planned to implement sweeping “tit-for-tat tariffs,” expected to take effect later on Wednesday.
The precious metal rose as much as 0.7%, and was around $20 an ounce from its previous session high. The White House and Trump have been reluctant to provide details of the goals and scope of the tariffs, which will apply once they begin at a 4 p.m. event in Washington.
The highly anticipated announcement – which will follow the imposition of tariffs on China, Canada and Mexico, as well as steel and aluminum – has led to a new wave of volatility, including a sharp decline in US stocks. While unstable times are generally favorable for gold, having helped it set more than 15 records this year, investors are keen to see the impact of the next set of tariffs on trade, the global economy and geopolitics. A drop below $2,999.46 will reverse the near-term downtrend, potentially spurring a decline towards the 50-day EMA at $2,925.44, which remains a key support level.
Gold has been one of the strongest performing commodities this year, rising 19% in the first three months to record its best quarter since 1986. This rise has been fuelled by continued purchases by central banks, as well as growing demand for safe havens. Global holdings in gold-backed ETFs rose to their highest levels since September 2023.
Spot gold rose 0.5% to $3,129.70 an ounce as of 10:40 a.m. in London, after peaking at $3,149 on Tuesday. The Bloomberg Spot Dollar Index fell slightly. Silver and palladium prices rose, while platinum fell.
Dollar index stabilizes ahead of tariff announcement
The US dollar index (DXY), which tracks the US dollar against six major currencies, settled at 104.00 at the time of writing on Wednesday. The U.S. dollar remains volatile hours before U.S. President Donald Trump announced the implementation of-for-tat tariffs at the White House at 20:00 GMT. Details of these tariffs remain murky in the White House and the Trump administration, and so far, their impact on markets remains unclear.
In terms of economic data releases, the main event on Wednesday was the private sector employment data through the Automated Data Processing System (ADP). As usual in Nonfarm Payrolls Week (NFP), the ADP number precedes the official nonfarm payrolls figure issued by the Bureau of Labor Statistics (BLS).).
The US Dollar Index (DXY) may not see any major movements or changes even after Trump’s declaration of “Liberation Day”. Traders are still confused about the impact of all these taxes and tariffs on the United States and the global economy. While a domestic recession in the US will lead to a significant depreciation of the US dollar, a global slowdown will benefit and strengthen the US dollar as a safe haven.
In this case, a return to the level of 105.00 is still possible in the coming days, with the 200-day SMA approaching at this point, consolidating this area as a strong resistance at 104.93. Once this area is breached, a series of pivot levels, such as 105.53 and 105.89, could limit the bullish momentum.
On the downside, the 104.00 level is the first support nearby, although it looks gloomy after testing since Friday. If this level does not hold, the US dollar index risks returning to the March range between 104.00 and 103.00.
