In a dramatic turn of events, US President Donald Trump's announcement of the Crypto Strategic Reserve has turned into a classic "buy the rumor, sell the news" scenario. The decision has led to a significant market reaction, with US indexes mirroring international trends and entering a sell-off mode. Each of the three major indexes has experienced a decline of approximately 2%. This market upheaval is largely attributed to Trump's tariffs, which have reignited global economic concerns and spurred a substantial stocks sell-off.
Trump's tariffs are at the heart of this economic storm. These customs duties, levied on specific merchandise imports or categories of products, have sparked considerable debate among economists. Two schools of thought exist: one views tariffs as a necessary measure to protect domestic industries, while the other sees them as a potential hindrance to free trade. In 2024, Mexico, China, and Canada were pivotal, accounting for 42% of total US imports. Notably, Mexico has emerged as the top exporter in this period, with exports valued at $466.6 billion, according to the US Census Bureau.
The tariffs announced by Trump include a significant 25% levy on imports from Canada and Mexico, alongside an additional 10% on Chinese goods. These measures have prompted widespread concern about the impact on US economic growth and inflationary pressures. In response to these developments, the US Dollar (USD) has entered a selling spiral during the first half of the day. Markets are increasingly concerned that this trade war could adversely affect US economic prospects and amplify inflation.
Amidst this turbulence, Spot Gold has managed to reconquer the $2,900 threshold early on Tuesday. Risk aversion has fueled demand for gold, often seen as a safe-haven asset in times of uncertainty. The precious metal's performance reflects broader concerns over global economic stability and the potential fallout from Trump's trade policies.
Currently, XAU/USD is battling to overcome a mildly bullish 20 Simple Moving Average (SMA), while both the 100 and 200 SMAs have recovered their upward trajectories, albeit far below the current level. Despite maintaining the $2,900 mark, XAU/USD retreated from an intraday peak of $2,927.91. The daily chart indicates that the pair is up for a second consecutive day, although another leg north remains uncertain.
In related currency movements, GBP/USD experienced an initial climb to three-month highs around 1.2750. However, it is now losing some upward momentum due to a modest rebound in the Greenback. This fluctuation underscores the volatility in currency markets triggered by Trump's trade maneuvers.