gold prices have shown resilience, bouncing back from the $2,970 level as traders adjust to a risk-off sentiment driven by significant developments in US-China trade relations and forthcoming insights from the Federal Reserve. The market’s focus is squarely on the potential impact of the newly implemented 104% tariffs on Chinese imports, alongside the release of the Fed’s minutes from its latest policy meeting.
As these tariffs come into force, investor confidence is waning, largely due to uncertainty surrounding the escalating trade tensions between the US and China. The tariffs, effective as of midnight on Wednesday, have sent shockwaves throughout the markets, leaving many investors unsettled. This atmosphere of caution is reflected in the sluggish performance of the US dollar, which is experiencing bearish momentum.
gold ’s appeal as a safe-haven asset is heightened in this context, particularly if the Fed’s minutes suggest a cautious approach in light of potential inflation risks. Should this occur, the dollar might experience a temporary rebound. Market observers anticipate that the implementation of these tariffs will discourage dollar buyers, keeping gold ’s bullish stance intact for now.
Amid these shifting dynamics, a rise in US Treasury bond yields could present challenges to gold ’s upward trajectory. Investors are weighing the effects of potential rate cuts by the Federal Reserve, which, if anticipated, could limit the influence of higher bond yields. Should the Fed signal a dovish stance, it may curtail any surge in yields, allowing gold to maintain its strength.
Technically, gold ’s position appears key; to sustain its upward momentum, it must close above the 21-day Simple Moving Average at $3,036. A successful break above this threshold could lead prices to test the weekly high of $3,056 and subsequently the $3,100 level. Conversely, if prices dip below the 50-day SMA at $2,952, it might shift the outlook bearish, with support levels lying at $2,880 and $2,809.
