- Gold prsice bounces off vital support at $2,955 and snaps losing streak.
- Markets still favor Gold as the safe bet for any stagflation or recession scenario besides tariffs.
- Gold bounces off from $2,955 and pops back above $3,010, gaining nearly 1% intraday.
Gold price (XAU/USD) pops while Equities run higher after their nosedive move on Monday and past Friday. The precious metal trades just above the $3,000 mark at the time of writing on Tuesday. The bounce is supported by a technical element on the one hand and a geopolitical driver on the other. That last one is the tit-for-tat war between China and the United States (US) spiraling out of control. US President Donald Trump threatened to impose an additional 50% tariff on Chinese imports.
Meanwhile, traders are sending the US yield curve all over the place. At a given point on Monday, investors were betting on five interest rate cuts from the Federal Reserve in 2025, quite a change compared to the one-or-none stance from just a week ago.
Treasury Secretary Scott Bessent meanwhile said that already 70 countries have asked to enter in negotiation talks with the US. President Trump will personally be involved in the trade talks. Meanwhile tariffs will not be paused and will remain in effect as talks will be underway.
Daily digest market movers: China marked
- West Australia’s Gold Road Resources says a scoping study on its flagship asset suggests there is more Gold than first thought, a clear indication that a $3.3 billion takeover bid from its joint venture partner undervalues the company, Financial Review reports. On Tuesday, Gold Road Resources released new data that showed the open-pit mine could hold more ounces underground that can be tapped profitably.
- The CME FedWatch tool shows chances for an interest rate cut by the Fed in May’s meeting standing at 31.7%, falling back from nearly 50% on Monday. For June, the chances of a rate cut are 96.9%, with a slim 3.1% chance for no rate cut at all.
- In his latest move, Trump threatened to slap an additional 50% levy on Chinese imports, while Beijing responded by saying it’s prepared to “fight to the end.” Shares in Europe rebounded from the worst three-day loss in five years, while US equity-index futures pointed to gains on Wall Street after Monday’s dizzying swings. Treasuries advanced after Monday’s sharp selloff. Oil gained while Gold climbed for the first time in four days. The US Dollar slipped against major peers, Bloomberg reports.
Gold Price Technical Analysis: $3,000 handle as red line
Gold, known as a safe haven asset, is unable to withstand selling pressure when market turmoil spreads to all asset classes, as seen in the past few days. That is something to keep in mind, meaning that the precious metal will not recover back to the all-time high at $3,167 in a straight line, as trade war tensions are set to take place from here on out.
Looking up, resistances are a bit spread out, with the first cap at $3,040 as the R1 resistance, followed by $3,057, a pivotal level since March 20. Further up, the R2 resistance at $3,097 precedes the current all-time high at $3,167.
On the downside, the pivotal level of the March 14 high at $3,004 roughly coincides with the $3,000 round number and is trying to provide support as writing. If this area does not hold as support, bears can target $2,955, where clearly many buyers were interested in scooping up Gold on Monday. Further down, the S2 support at $2,899 is the last line of defence, with the 55-day Simple Moving Average (SMA) coming in already in advance at $2,930.
XAU/USD: Daily Chart
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.
