In a move that has sent ripples through the global financial markets, President Donald Trump announced his consideration of imposing 25% tariffs on Mexico and Canada, effective February 1. This announcement has had significant implications for various financial instruments, including precious metals, currencies, and government bonds. Investors, facing heightened economic uncertainty, have sought refuge in Gold, bolstering its price to near-monthly highs of $2,725.
"We're thinking in terms of 25% on Mexico and Canada," – US President Donald Trump
The potential tariffs have generated a flight to safety among investors, pushing the Gold price towards a one-month high of $2,750. The symmetrical triangle breakout remains a crucial technical indicator, which continues to support the bullish case for Gold prices. As traders react to the looming tariffs, the broader market sentiment will likely dictate Gold's trading patterns in the days ahead.
The US Dollar (USD) has also gained traction due to its safe-haven appeal, which has capped the USD-denominated Gold price. This demand for safety has simultaneously weighed down US Treasury bond yields, highlighting investors' shift towards more secure assets. The flight to safety theme is further strengthened by the ongoing uncertainties surrounding Trump's tariff policies.
Amid these developments, the GBP/USD experienced a notable rise of 1.35% on Monday following Trump's tariff announcement. This movement underscores the currency market's sensitivity to geopolitical developments and trade policy decisions. Meanwhile, the AUD/USD faced intense selling pressure, with its trajectory directed towards 0.6200.
Gold's bullish momentum is supported by the 14-day Relative Strength Index (RSI), which points north above the midline. This indicator suggests a potential continuation of the upward trend. Conversely, for sellers eyeing opportunities, the 21-day Simple Moving Average (SMA) at $2,658 could serve as a pivotal target.
In addition to the proposed tariffs on Mexico and Canada, President Trump remains poised to implement tariffs on China if Beijing does not approve the TikTok deal. This further exacerbates global trade tensions and contributes to the prevailing economic uncertainty.
With no top-tier US economic data releases scheduled, market participants will closely monitor Trump's tariff talks for cues on future price movements. The Gold market faces volatile trading conditions as it remains at the mercy of these broader market sentiments and geopolitical developments.