The United States is poised to implement significant changes to its trade policy, with China, Canada, and Mexico immediately in the crosshairs. This move could have profound implications for international markets and trade dynamics. Concurrently, the gold market is experiencing a surge, with prices reaching two-month highs at $2,750, aiming for the next resistance level at $2,790. This comes as the Federal Reserve's anticipated monetary easing fuels market speculation. Meanwhile, fluctuations in currency pairs like AUD/USD and USD/JPY reflect a broader narrative of economic uncertainty and risk assessment.
Gold has charted a remarkable symmetrical triangle breakout earlier this month. Currently, it holds above all major daily simple moving averages (SMA), signaling robust support for its upward trajectory. Analysts are closely watching the 50-day and 100-day SMAs, which converge at $2,650, marking a critical juncture for gold buyers. The 14-day Relative Strength Index (RSI) stands near 67, maintaining optimism among investors for sustained growth.
A comprehensive investigation into US trade relationships has been initiated through a presidential memorandum. This action reflects growing tensions, particularly with China, where President Trump's tariff threats have revived demand for the US Dollar and gold as safe-haven assets.
"We are talking about a 10% tariff on China because they sell fentanyl." – Donald Trump
The US Treasury bond yields are experiencing a modest recovery, which may limit the upside potential for the non-yielding gold price. Nevertheless, markets are pricing in a total easing of 37 basis points (bps) from the Federal Reserve this year. According to Refinitive data, the first-rate cut is not fully priced in until July.
In the currency markets, AUD/USD struggles to capitalize on the previous day's late rebound and remains below the 0.6300 mark. In contrast, USD/JPY is looking to build on an overnight bounce from a one-month low amid a positive risk tone. These fluctuations indicate underlying volatility in response to shifting economic policies and market expectations.
The potential for policy shifts has also sparked concerns across North American borders. Canada and Mexico, key US trading partners under the USMCA agreement, face direct impacts from any US trade policy changes. Negotiations and diplomatic efforts will likely intensify as these countries seek to protect their economic interests in light of new US strategies.