- XAU/USD extends gains amid geopolitical tensions despite solid US jobs data
- US tariffs on Canadian aluminum and steel imports begin on Wednesday, boosting Gold’s safe-haven appeal.
- Markets await US CPI inflation data on Wednesday and PPI on Thursday for the next Fed clues.
Gold (XAU) rallied on Tuesday as the trade war spurred demand for the yellow metal due to its safe-haven appeal. Upbeat United States (US) jobs data was ignored by traders, who continued to pile on Bullion. XAU/USD is trading at $2,917, up over 1%.
Sentiment has recently improved as Canada and the US de-escalated the threat of imposing tariffs. Concerns about an economic slowdown in the US exert downward pressure on US Treasury yields and the Greenback, which is a tailwind for Bullion prices.
Meanwhile, Trump’s trade tariffs on aluminum and steel imports will go into effect on Wednesday. The US Bureau of Labor Statistics (BLS) revealed that job openings rose in February.
Breaking news from Saudi Arabia revealed that Ukraine is ready to accept a ceasefire proposal, US Secretary of State Marco Rubio revealed. Ukraine’s President Volodymyr Zelenskyy added, “It is up to the US now to convince Russia to agree on a ceasefire.”
This could be a headwind for Gold prices, which tend to climb due to high geopolitical tensions and recessionary fears.
Meanwhile, XAU/USD traders eye the release of the Consumer Price Index (CPI) in the US on Wednesday, followed by the release of the Producer Price Index (PPI) on Thursday.
Daily digest market movers: Gold price unfazed by high US yields
- The US 10-year Treasury bond yield recovers and edges up six basis points to 4.282% as traders eye the Fed’s interest rate cuts.
- US real yields, as measured by the US 10-year Treasury Inflation-Protected Securities (TIPS) yield that correlates inversely to Gold prices, climb five-and-a-half basis points to 1.963%, a headwind for the non-yielding metal.
- The Atlanta Fed GDP Now model predicts the first quarter of 2025 at -2.4%, which would be the first negative print since the COVID-19 pandemic.
- The US JOLTS report showed that job openings rose to 7.740 million in January, up from 7.508 million, surpassing expectations of 7.63 million, signaling continued strength in the labor market.
- The People’s Bank of China (PBoC) continues to purchase Gold, according to the World Gold Council (WGC). The PBoC increased its holdings by 10 tonnes in the first two months of 2025. However, the largest buyer was the National Bank of Poland (NBP), which increased its reserve by 29 tonnes, its largest purchase since June 2019, when it bought 95 tonnes.
- Money market traders had priced in 77.5 basis points of easing in 2025, up from 74 bps last Friday, via data from Prime Market Terminal.
XAU/USD technical outlook: Gold price advances past $2,900
From a technical standpoint, Gold continues to trend up, but buyers need to clear last week’s peak at $2,930 on March 7 high so that buyers can challenge the psychological mark. A breach of the latter will expose the record high at $2,954, followed by the $3,000 mark.
Conversely, if XAU/USD drops below $2,900, the next support would be $2,850 ahead of the February 28 low of $2,832. Up next would be $2,800.
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.
