Gold Nears Record Highs as Market Eyes Fed Moves and Trump Tariff Talk

Gold continues its impressive weekly rally, edging closer to the all-time high of $2,790, as market sentiment remains cautious.

The precious metal is trading at $2,772, marking a 0.60% gain, driven by a mix of global and domestic factors. However, the recent remarks from US President Donald Trump have added conspiracy to the market, as his indication of holding back on imposing new tariffs on Chinese goods surprised many traders.

Despite this, the market sentiment remains slightly negative as U.S. economic data released on Friday showed a mixed outlook. According to S&P Global, manufacturing activity in the U.S. saw improvement in December, which provided some optimism.

XAU/USD

However, the University of Michigan’s final survey for January reported a decline in consumer sentiment, which raised concerns about the broader economic outlook. These conflicting signals continue to impact investor sentiment, but gold remains a strong performer amid economic uncertainties.

• Gold edges closer to its record high, trading at $2,772 with a 0.60% gain.
• Trump hints at delaying new China tariffs, surprising traders.
• Mixed US data shows improved manufacturing but weaker consumer sentiment.

On the US front, the broad-based US dollar has been losing traction, with the US Dollar Index (DXY) dropping 0.62% to 107.44. This decline follows former President Donald Trump’s comments at the World Economic Forum, where he demanded lower interest rates.

The Greenback is set to finish the week with a significant loss of 1.77%. Meanwhile, the gold price climbed despite higher real yields, with the 10-year Treasury Inflation-Protected Securities (TIPS) yield rising to 2.23%. On the other hand, the US 10-year Treasury bond yield slid two basis points to 4.625%.

US economic data showed mixed results. The S&P Global Manufacturing PMI rose to 50.1, indicating slight growth, while the Services PMI dropped to 52.8, missing expectations. Consumer sentiment, measured by the University of Michigan survey, fell to 71.1, below forecasts. However, existing home sales increased by 2.2% in December, showing resilience in the housing market.

Looking ahead, market participants are anticipating key data releases next week, including Durable Goods Orders, GDP figures, and the Core PCE Price Index, the Fed’s preferred inflation gauge. The Federal Reserve is also set to announce its interest rate decision, with expectations leaning toward two rate cuts by the end of 2025, starting in June.

Gold Technical Analysis

Gold (XAU/USD) closed trading at $2,770.88, experiencing a slight pullback from its recent high of $2,785.74. The price remains above the key support level of $2,763.79, which aligns with the ongoing uptrend supported by the 50-period EMA at $2,750.36.

A sustained hold above this support could trigger another push toward the $2,785.74 and $2,797.09 resistance levels. However, a break below $2,763.79 could expose gold to further downside towards $2,748.76 and $2,736.41. The overall bullish trend remains intact as long as the price stays above the upward trendline and the 50 EMA support zone.

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.