GOLD Analysis
Afternoon: Gold rose to $3,410 and dropped again showing Volatility as Trade War Tensions Offset Fed’s Dovish Stance
Highlights:
- Trump’s refusal to ease 145% tariffs dims prospects of progress in US-China trade talks.
- Fed maintains rate but signals concern over inflation and unemployment, weighing on gold’s upside.
- Key data from Germany and the US to guide near-term sentiment and price direction.
Overview:
Gold prices showing weakness as geopolitical uncertainty, particularly regarding US-China trade negotiations, continued to enhance the yellow metal’s safe-haven demand. Investors turned cautious after President Trump reaffirmed his position on maintaining 145% tariffs on Chinese imports, signaling a lack of flexibility ahead of key talks in Switzerland. This stance sharply diminished market hopes for a meaningful breakthrough that could ease the long-standing trade standoff between the world's two largest economies.
While the escalation in trade tensions typically benefits gold due to its safe-haven appeal, the Federal Reserve’s latest policy decision tempered the metal's upside. As widely anticipated, the Fed kept its benchmark interest rate unchanged, but offered a more cautious economic outlook. In his post-meeting remarks, Chair Jerome Powell highlighted the growing risks of inflationary pressure and rising unemployment, while also clarifying that the Fed would not consider a pre-emptive rate cut to counteract potential fallout from trade-related disruptions.
The market now turns its focus to a slate of key economic indicators, including German Industrial Production, German Trade Balance, and critical data from the U.S. labor market and productivity reports, which may provide further clarity on global economic health.
Technical Outlook:
Gold is currently trading in a defined range with immediate support seen at $3,338 and resistance at $3,411.
Trading Strategy
- Action: Selling Gold from 3379-80$ targeting 3335$ place a stop-loss above $3410 to protect against a renewed breakout.
- Alternate Option to this is a selling on Breakout of 3320 level for 3265 as a target which invalidates above 3340$