Gold Keeps on Trucking
Gold prices are continuing to push higher this week with the futures market expanding further into record highs. Safe-haven demand has been the key driver behind the recent move higher with investors unnerved by the political climate now that Trump is back in office. The futures market is now up more than 12% from the December lows and looks poised for further gains near-term, given the growing climate of uncertainty. Trump’s recent comments around plans to turn Gaza into a Middle East Riviera have provoked particular concern, fuelling fears of a fresh US conflict in the Middle East is such a plan was put into action.
Trump Tariffs & Fed Expectations
Gold prices are also being supported by a weaker US Dollar recently. Despite Fed rate-cut expectations being pushed back, USD has slipped on fading trade-war risks. Inconsistent rhetoric around tariffs as well as recent compromises from Canada and Mexico have sapped the initial upside impetus from Trump’s tariff announcements. Additionally, expectations that the US and China will negotiate a truce are also keeping USD from moving higher here.
US Inflation on Watch
Looking ahead this week, traders will be watching incoming US inflation data as well as comments from Fed’s Powell. There are bullish USD risks given the stronger inflation environment recently. If we see an upside surprise in US CPI along with hawkish comments from Powell, this could fuel some near-term profit-taking in gold. However, if Trump imposes more tariffs or steps up his rhetoric again, any correction will likely be short-lived.
Technical Views
Gold
The rally in gold prices has seen the market breaking out above the 2,859.15 level this week. With momentum studies bullish, focus now on a test of the 1.61% fib extension at the 2,949.88 level next. To the downside, 2,789.40 remains key support and the main pivot for gold, keeping the bullish outlook intact while price holds above.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.