- Gold prices hit new highs amid US tariff uncertainty and retaliatory measures from Canada.
- Safe-haven demand and inflation concerns drive gold prices up, despite a strengthening US dollar.
- Technical analysis shows bullish momentum for gold, with potential for further upside if key support levels hold.
Gold prices have been on a seesaw today as US President Donald Trump followed through on his tariff pledge. This was met with retaliatory tariffs from Canada which continued in the US session as Ontario Premier Ford announced that US companies are now banned from bidding on provincial contracts. The ban takes effect immediately and will remain in place until the US removes its tariffs.
This was then followed by comments from White House Senior Adviser Hassett stating that Canada seems to have misunderstood the wording in President Trump’s executive order.
Later in the US session, some good news came about as Mexican President Claudia Sheinbaum stated that tariffs against Mexico will be delayed for a month. This was then confirmed by President Trump who stated that the US will have negotiations headed by Rubio, Bessent, Lutnick as well as Mexican officials.
These tariff uncertainties are set to continue as countries are unlikely to stand idle in the face of Trump’s tariff proposals. This should keep Gold prices supported even as the US Dollar strengthens.This has been my view since President Trump assumed office on January 20.
Will Tariffs lead to a rise in global inflation?
The US dollar has strengthened as concerns grow that tariffs could push inflation higher, even though Central Banks seem to have brought it under control.
Today we heard comments from Fed policymaker Susan Collins who said that with the kind of broad-based tariffs that were announced over the weekend, one would expect it to have an impact on prices. She elaborated by saying that although it’s unclear how much of an impact it would have or how the central bank would need to respond to that change in price pressures.
Collins finished by saying there’s no urgency for the central bank to lower rates right now given the uncertainties.
This comes after President Trump warned that Americans might have to deal with higher prices because of tariffs, and the trade war’s effects are likely to spread worldwide. This is a nod that the Trump administration is aware that tariffs will have an impact on inflation which is in stark contrast to testimony given by US Commerce Secretary Nominee Lutnick who is the frontrunner for the position.
Lutnick stated that he is in favor of sweeping tariffs saying it does not impact inflation. Lutnick was also hawkish on China which does not bode well for markets moving forward.
US data ahead
On the data front, we do have some high impact data releases from the US thai week. The big one obviously being the NFP release on Friday but we also have ISM services PMI due on Wednesday.
I do think that the data may take a backseat this week as markets digest how the tariffs imposed shake out as well as any retaliatory tariffs from the countries targeted. There might also be more tariffs in the pipeline which could further complicate matters.
Final thoughts
Personally I still maintain a bullish bias on Gold largely from the fact that the uncertainties around tariffs and their impact will keep safe haven flows elevated. I did mention this in last week article Gold (XAU/USD) Price Analysis: Bullish Bias Amid Tariff Uncertainty and FOMC.
Geopolitical and growth concerns may also factor in and thus lend a supporting hand to Gold prices in the days and weeks ahead.
Technical Analysis – Gold (XAU/USD)
From a technical analysis standpoint, this analysis is a follow up from the technicals last week. Read: Gold (XAU/USD) Price Analysis: Bullish Bias Amid Tariff Uncertainty and FOMC
Golds initially saw a pullback after the market opened last night, however as discussed in last week’s piece the selloff proved short-lived.
The selloff could be attributed to potential profit taking and the stronger US Dollar. However the European market open saw bulls return as market participants eyed the safe haven as uncertainties continue to rise.
Gold (XAU/USD) Daily Chart, January 28, 2025
Looking at the daily chart and on Friday Gold finally broke above the $2800/oz level. However it barely closed above the key level with a solid daily close today likely to keep bulls interested.
The RSI on the daily timeframe is however in overbought territory, which warrants keeping an eye on.
Gold (XAU/USD) Four-Hour H4 Chart, February 3, 2025
Dropping down to the H4 chart and you can see above, we have now printed a new ATH around 2830, with a pullback under way at the time of writing.
Immediate support rests at 2812 with a H4 candle close below this level opening up a retest of 2800 and potentially today’s daily swing low at 2772.
If the 2812 handle holds on the H4 timeframe we could be in for a rise toward the 2830 handle before the 2850 and 2875 handle come into focus.
There is no historical price action to take a look at as we trade at unprecedented levels. Hence i will be keeping an eye on the psychological levels such as 2850 and 2875.
Support
Resistance
