- The gold rose more than 1% on Monday after the US president, Trump, said it was too late for China, Mexico and Canada to avoid tariffs that enter into force on Tuesday.
- Canada will impose retaliation tariffs of 25% as of Tuesday, while China will apply a 15% tax to US agricultural products from March 10.
- The US yet yields decrease again on Tuesday, reaching a minimum close to five months by 4.11%.
The price of gold (Xau/USD) rises and quotes around 2,910 $ at the time of writing, after increasing more than 1% the previous day. The recent increase occurred after the US president Donald Trump confirmed on Monday that tariffs for Canada, Mexico and China were underway. The markets still doubted Monday if President Trump would allow an extension in the implementation of tariffs, based on the efforts that countries were doing to meet the demands of the Trump administration. It seemed that it was a bit too late, since President Trump decided to continue with the imposition of the tariffs committed as of Tuesday.
Meanwhile, Canada and China have already responded to the imposition of unilateral tariffs by the USA. A statement issued by the office of the Canadian Prime Minister, Justin Trudeau, confirmed that Canada will impose retaliation tariffs on US imports from Tuesday if US tariffs enter into force. “Canada will begin with 25% tariffs on US imports for a value of 30,000 million C $,” said the statement, while tariffs on other products worth 125,000 million C $ will enter into force in 21 days.
On the other hand, the China Ministry of Commerce announced early on Tuesday that it will impose additional tariffs of up to 15% on the imports of key agricultural products, including chicken, pork, soybean and US beef. The Ministry said that the announced tariffs will enter into force from March 10.
In the midst of this commercial war of reprisals, US yields are falling again. The 10 -year reference performance of the US reached 4.11% downward in the first Asian operations on Tuesday. A minimum of almost five months, returning to levels not seen since mid -October.
What moves the market today: Search Refuge Search
- In the Geopolitical Front, a senior defense official said that the US was leaving all military aid to Ukraine, Bloomberg reports.
- After the events of Monday, the CME Fedwatch tool is seeing that the market clamor for an interest rate cut of the Federal Reserve (Fed) for June is becoming even stronger. The probabilities are currently located at 85.6%, with a slight possibility of 14.4% of the rates remain unchanged.
- A series of recent US data that show resurgual inflation and a slowdown activity are feeding the fears that the world’s largest economy could be heading towards a period of stagning, reports Reuters.
Technical analysis: a very long path ahead
Gold extends its profits from Monday at the beginning of the European negotiation session on Tuesday. The ranges have become more tight for the levels of the daily pivot point, confirming the current indecision among investors after the fall of last week. Be attentive to a continuation in any direction. However, uncertainty about a commercial war of reprisals will see gold being supported.
The daily pivot point in $ 2,879 and the daily R1 resistance in 2,903 $ are currently providing support to bounce and try to push the highest gold. In the event that gold has enough impulse to continue upwards, the daily R2 resistance in 2,917 $ could possibly be the final limit of Tuesday before the historical maximum of 2,956 $ reached on February 24.
In the lower part, in addition to the aforementioned pivot point and resistance levels R1, S1 support in 2,866 $ converge with the minimum of Thursday. That will be the life support for this Tuesday. If golden bulls want to avoid another downward movement, that level must be maintained. Below, the daily S2 support at $ 2,842 should be able to absorb any additional pressure.
Xau/USD: Daily graphic
FAQS GOLD
Gold has played a fundamental role in the history of mankind, since it has been widely used as a deposit of value and a half of exchange. At present, apart from its brightness and use for jewelry, precious metal is considered an active refuge, which means that it is considered a good investment in turbulent times. Gold is also considered a coverage against inflation and depreciation of currencies, since it does not depend on any specific issuer or government.
Central banks are the greatest gold holders. In their objective of supporting their currencies in turbulent times, central banks tend to diversify their reserves and buy gold to improve the perception of strength of the economy and currency. High gold reserves can be a source of trust for the solvency of a country. Central banks added 1,136 tons of gold worth 70,000 million to their reservations in 2022, according to data from the World Gold Council. It is the largest annual purchase since there are records. The central banks of emerging economies such as China, India and Türkiye are rapidly increasing their gold reserves.
Gold has a reverse correlation with the US dollar and US Treasury bonds, which are the main reserve and shelter assets. When the dollar depreciates, the price of gold tends to rise, which allows investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rebound in the stock market tends to weaken the price of gold, while mass sales in higher risk markets tend to favor precious metal.
The price of gold can move due to a wide range of factors. Geopolitical instability or fear of a deep recession can cause the price of gold to rise rapidly due to its condition of active refuge. As an asset without yield, the price of gold tends to rise when interest rates lower, while the money increases to the yellow metal. Even so, most movements depend on how the US dollar (USD) behaves, since the asset is quoted in dollars (Xau/USD). A strong dollar tends to keep the price of gold controlled, while a weakest dollar probably thrusts gold prices.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
