- Gold price holds steady near a one-week high, and lacks bullish conviction.
- Trade war fears, Fed rate cut bets, and a bearish USD support the XAU/USD pair.
- A positive risk tone caps the commodity ahead of the US NFP report on Friday.
Gold price (XAU/USD) continues with its struggle to gain any meaningful traction and oscillates in a narrow band, just below the weekly low through the early European session on Thursday. Concerns about US President Donald Trump’s tariff measures continue to act as a tailwind for the safe-haven bullion. Apart from this, the bearish sentiment surrounding the US Dollar (USD) and rising bets for an earlier-than-expected interest rate cut by the Federal Reserve (Fed) turn out to be other factors underpinning the non-yielding yellow metal.
However, a generally positive tone around the equity markets holds back bulls from placing fresh bets around the Gold price. Investors also seem reluctant and opt to wait for the release of the US monthly employment details, or the Nonfarm Payrolls (NFP) report, on Friday. In the meantime, the usual Weekly Initial Jobless Claims data from the US might provide some impetus later during the North American session. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the XAU/USD pair remains to the upside.
Daily Digest Market Movers: Gold price consolidates amid mixed fundamental cues
- US President Donald Trump’s new 25% tariffs on most imports from Mexico and Canada took effect on Tuesday, along with the doubling of duties on Chinese goods to 20%.
- Canada announced retaliatory tariffs against more than $100 billion worth of US products, while China slapped tariffs of up to 15% on various US agricultural exports.
- In his first address to the US Congress, Trump said that further tariffs, including “reciprocal tariffs” would follow on April 2, raising the risk of an all-out trade war.
- Investors remain worried that Trump’s tariffs could slow the US economic growth and force the Federal Reserve to cut interest rates multiple times by the end of this year.
- The bets were lifted by the Automatic Data Processing (ADP) report, which showed that US private sector employment grew by just 77K in February, vs 140K expected.
- Meanwhile, the economic activity in the US service sector continued to expand at an accelerating pace in February, though it did little to inspire the US Dollar bulls.
- The USD Index (DXY) drops to its lowest level since December 2024 and further acts as a tailwind for the Gold price during the Asian session on Thursday.
- The White House announced a one-month delay for US automakers to comply with the US–Mexico–Canada Agreement regarding the tariffs imposed on Mexico and Canada.
- This, in turn, boosts investors’ appetite for riskier assets, which is holding back traders from placing aggressive bullish bets around the safe-haven XAU/USD pair.
- Investors now look to the usual Weekly Initial Jobless Claims data from the US for some impetus, though the focus remains on the US Nonfarm Payrolls on Friday.
Gold price bulls remain on the sidelines and await a move beyond the $2,934 hurdle
From a technical perspective, momentum beyond the $2,934 immediate hurdle has the potential to lift the Gold price back towards the all-time peak, around the $2,956 area touched in February. Some follow-through buying would be seen as a fresh trigger for bullish traders and pave the way for an extension of a multi-month-old uptrend witnessed amid positive oscillators on the daily chart.
Meanwhile, the lack of follow-through buying warrants some caution before positioning for any further gains. That said, any corrective slide might still be seen as a buying opportunity near the $2,900 mark and remain limited. Some follow-through selling, however, could pave the way for deeper losses towards the $2,884-2,883 intermediate support en route to the $2,860-2,858 horizontal support.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
