GOLD Analysis
Afternoon: Gold Rally Continues as Global Markets React to US Tariffs
Highlights:
- Gold soared to $2,920 as heightened trade tensions triggered safe-haven demand.
- US imposed tariffs on Canada, Mexico, and China, prompting global retaliatory measures.
- Weak economic data and geopolitical developments added to market uncertainty
Overview:
Gold prices surged to $2,920, driven by escalating trade tensions and growing concerns over economic growth. President Donald Trump enforced 25% tariffs on Canada and Mexico and 20% tariffs on China, leading to immediate retaliatory actions from all affected nations. The European Union was also warned of potential tariffs, while the US administration hinted at increasing duties on agricultural exports, further intensifying trade war fears.
The tariff measures come at a time of economic fragility, exacerbated by weak macroeconomic data. The ISM Manufacturing PMI’s new orders index showed a significant decline, indicating slowing industrial activity. Additionally, the S&P Global Services PMI unexpectedly fell, signaling weakness in the service sector, both of which were attributed to mounting trade war uncertainties. Concerns over economic slowdown drove investors toward gold as a hedge against financial instability.
On the geopolitical front, tensions eased slightly as the US announced an end to aid for Ukraine and hinted at possible sanctions relief for Russia. These developments led to a shift in Western alliances, weakening NATO’s unified stance on Ukraine support. However, this newfound geopolitical uncertainty further fueled safe-haven buying in gold.
Technical Analysis
- Support Levels: $2,880 (Gold USD), 85,500 (Gold MCX)
- Resistance Levels: $2,930 (Gold USD), 86,500 (Gold MCX)
- Market Sentiment: Buying from 2904-11 zone for targeting 2945-48 which invalidates below 2890.
Outlook and Strategy
Gold’s bullish momentum is likely to persist as long as trade tensions remain high and economic uncertainty looms. Traders should monitor key economic indicators, including the upcoming German Final Services PMI, Euro Zone PPI (m/m), ADP Non-Farm Employment Change, US Final Services PMI, and ISM Services PMI, which could provide further direction on global growth prospects.
Investors should remain cautious as gold is trading with extreme volatility. Profit booking may occur at higher levels, but safe-haven demand is expected to support prices in the near term. Keeping a close watch on trade policy developments and central bank signals will be crucial in navigating the gold market’s next moves.
Support and Resistance Levels:
