- Overnight, unclear tariffs comments were delivered by US President Trump.
- Bullion under pressure from strong selling and trades down near 1% loss on Thursday.
- Although US yields drop off further, the precious metal has lost support for now.
Gold’s price (XAU/USD) is taking a hit on Thursday and extends this week’s correction to hit a ten-day low near $2,873 just before seeing a small bounce of relief on Thursday. The leg lower comes after United States (US) President Donald Trump cast doubts and confusion during a cabinet meeting on Wednesday about what levies will be applied, when and to which countries.
President Trump said “tariffs will go on, not all, but a lot of them” and added that levies on Canada and Mexico imports will go into effect on April 2. Reciprocal tariffs should be installed on April 2 too. The US President confirmed a 25% tariff would be imposed on Europe as well on autos and other things but he did not provide further details.
Daily digest market movers: Which tariffs? What tariffs? When tariffs?
- Overnight markets braced for Nvidia’s (NVDA) earnings. Nvidia’s quarterly sales will be about $43 billion, slightly above analysts’ estimates, but gross profit margins will be tighter than expected due to the rollout of a new chip design called Blackwell. The mixed outlook came in with bad timing as concerns about slowing spending on AI and the potential impacts of US tariffs could mean more headwinds for the company.
- The CME Fedwatch Tool projects a 33.0% chance that the interest rates will remain at the current range in June, with the rest showing a possible rate cut.
- On the US data front, the second reading of the US Gross Domestic Product (GDP) for the fourth quarter is due at 13:30 GMT. Projections are that the GDP annualized will remain stable at 2.3%. The quarterly headline preliminary Personal Consumption Expenditures (PCE), which precedes the monthly PCE on Friday, is expected to continue stable at 2.3% as well. The core PCE number should come in at 2.5%, also unchanged.
Technical Analysis: Quick squeeze lower
On Wednesday, a few analysts warned that greedy price action was taking place in Gold, with traders willing to buy at any given price to remain part of the rally. With the current correction, several traders will be facing a squeeze and might soon see their stop losses exercised. This idiosyncratic action will result in more selling pressure and might even see a firm drop lower in Bullion to possibly even $2,860 on the day.
The main element to trigger a turnaround comes at the daily Pivot Point of $2,912. Should Gold fully recover back above that level, it would confirm that traders are buying the current dip. Once through there, $2,934 and $2,951 are levels on the upside to look out for in the form of the intraday R1 and R2 resistances.
On the flip side, Tuesday’s low at $2,890 is starting to give way. Further down, watch out for $2,873 (the S2 support), which could open the door for a test to $2,860.
XAU/USD: Daily Chart
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
