- Gold price set to clinch second weekly gain, with eyes on $3,000.
- US Dollar and Treasury yields rebound on government shutdown aversion news.
- Gold price stays bullish as an ascending triangle breakout remains in play.
Gold price is hanging close to a new record high set on Thursday, biding time before the next move higher to clinch the $3,000 threshold for the first time.
Gold price primes for another leg up
Amid another record-rally, Gold price will likely book the second weekly gain, up roughly 2.5% so far this week. US President Donald Trump’s induced trade war, along with increased expectations of monetary policy easing by the US Federal Reserve (Fed), sponsored the Gold price upsurge.
However, Gold buyers appear to turn cautious as the recent rally paused just shy of the $3,000 psychological hurdle. Traders could use that as an excuse to take profits off the table on their Gold long positions before next week’s Fed policy announcements.
The renewed demand from the US Dollar (USD) and the US Treasury bond yields also act as a headwind to the upbeat momentum in Gold price. The improvement in risk sentiment on an aversion to the US government shutdown and hopes of a US-Canada trade truce diminish the demand for the US government bonds, lifting the US Treasury bond yields and the USD.
US Senate Democratic Leader Chuck Schumer said late Thursday, “I will vote to keep the government open, and not shut it down.” Meanwhile, Ontario Premier Doug Ford said there will be another meeting next week between Canadian and American trade officials, following his meeting with US Commerce Secretary Howard Lutnick.
Doug added, "we're having very productive conversations and they're turning out very, very well.”
In the day ahead, it remains to be seen if risk sentiment remains in a sweet spot as escalating trade tensions between the US and the European Union (EU) could haunt markets, reviving the safe-haven appeal of the Gold price.
Amid an escalating trade war, the EU responded to blanket US tariffs on steel and aluminium by imposing a 50% tax on American whiskey exports, prompting Trump to threaten a 200% tariff on imports of European wines and spirits.
If fears over global trade war intensify, they will likely raise risks of a recession and the odds of the Fed lowering rates further, fuelling a fresh downswing in the USD while boosting Gold price to fresh lifetime highs.
Markets also weigh in on the US-Russia talks for a ceasefire in the Ukraine conflict. Russian President Vladimir Putin said on Thursday that he agreed in principle with US proposals to halt the fighting but said he wanted to address the “root causes of the conflict”.
“We need to discuss this with our American partners – perhaps a call with Donald Trump,” Putin added.
The US Consumer Sentiment and Inflation Expectations data will play second fiddle to the tariff and geopolitical headlines heading into the weekend.
Gold price technical analysis: Daily chart
Gold price confirmed an upside break of an ascending triangle formation after closing Thursday above the horizontal trendline resistance at $2,956.
Gold buyers need to scale the $3,000 psychological barrier to extend the record-rally toward the $3,050 mark.
The 14-day Relative Strength Index (RSI) sits just beneath the overbought region, which is currently near 68 and keeps buyers hopeful.
Therefore, any retracement in Gold price will likely be quickly bought amid bargain hurting.
On a corrective downside, Gold price could challenge the previous triangle resistance-turned-support at $2,919.
The last line of defense for buyers is at the triangle support line, pegged at $2,898.
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.
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