In a series of bold economic maneuvers, President Donald Trump announced on Saturday that the United States will impose 25% tariffs on imports from Mexico and Canada, along with 10% levies on Chinese goods. The President indicated plans to extend these trade measures to the European Union and the United Kingdom, further intensifying global trade tensions. These developments have significantly impacted financial markets, notably propelling Spot Gold prices to unprecedented heights.
The tariffs' announcement coincided with key developments in the macroeconomic calendar. This week will feature critical data releases, including the Bank of England's (BoE) monetary policy decision and several US employment-related reports, such as the ADP Employment Change survey and the Nonfarm Payrolls report. These events are expected to influence market dynamics further, adding layers of complexity to an already volatile economic landscape.
Amidst these developments, technical indicators on the 4-hour chart have shown signs of reaching overbought conditions before leveling off, reflecting the ongoing market retracement. Despite the turbulence, the US Dollar remains the only asset demonstrating robust performance in response to the newly imposed tariffs.
Conversely, the daily chart for XAU/USD reveals that the pair is trading within a bullish channel. Spot Gold surged beyond the $2,800 mark, recording a fresh all-time high at $2,825.39. The risk-averse environment has clearly benefited gold prices, with XAU/USD maintaining its upward trajectory. The US Dollar's recent retracement allowed gold to extend its gains further, driven by a sharp decline in US Treasury bond yields following Trump's tariff decisions.
The technical analysis underscores Spot Gold's bullish momentum. The 20 Simple Moving Average (SMA) is gaining momentum northward, positioned above the 100 and 200 SMAs, providing dynamic support around $2,726. This technical setup suggests a continued upward path for XAU/USD in the near term.
The broader implications of these tariffs are anticipated to ripple through global markets. As the US targets major economies like the EU and the UK, potential retaliatory measures could exacerbate trade conflicts and influence financial stability worldwide. Analysts remain vigilant, assessing how these economic policies will shape future market trends.
Market participants should closely monitor upcoming macroeconomic releases this week. The BoE's monetary policy decision will be pivotal in determining the UK's economic direction amid these trade tensions. Similarly, the US employment data will offer insights into the domestic labor market's health, influencing investor sentiment and market movements.