Gold bulls maintain their dominance near a monthly high as concerns over tariffs, expectations of a dovish Federal Reserve, and a weakened US dollar provide support
What’s happening:-
Gold prices climbed sharply this morning following an announcement by US President Donald Trump regarding plans to raise tariffs on all nations
What happened:-
During the weekend, Trump initially introduced a global tariff rate of 10%, which he later increased to 15% after the US Supreme Court declared the tariffs illegal.
Additionally, a weakened US dollar contributed to the upward momentum in gold prices earlier today.
Why it matters:-
The U.S. Supreme Court has ruled that the tariffs imposed by former President Trump under the International Emergency Economic Powers Act are illegal. In a 6-3 decision, the court determined that Trump acted beyond the scope of his authority under the law.
This ruling triggered a strong reaction from the former president, who asserted there were "other alternatives" to enforce tariffs. Trump claimed the new tariffs would take effect immediately, though it remains uncertain if he has officially signed any related documentation.
Gold's Surge Fueled by Uncertainty and Global Geopolitical Strains
On the international front, Europe’s trade commissioner has suggested suspending the ratification of the trade agreement with the U.S. Concurrently, India has postponed its negotiations with the U.S. over a proposed interim trade deal.
Adding to geopolitical tensions, concerns persist about a potential U.S. military strike on Iran, especially as nuclear discussions remain at an impasse.
In financial markets, a weaker U.S. dollar provided additional momentum for gold prices. A declining dollar value typically makes metals more affordable for foreign currency traders. The U.S. dollar index, which tracks the currency against a collection of major peers, fell 0.4% to 97.41 earlier today.
Gold spot prices climbed by 1.1%, reaching $5,161.36 per ounce this morning. Other metals also saw significant gains, with silver spiking 3.4% to $87.5205 per ounce, platinum advancing 1.2% to $2,185.90, and palladium inching up by 0.4%, trading at $1,764.64 per ounce.
What to watch:-
Key areas of focus: Investors will closely track updates on tariff announcements from the US, paying particular attention to reactions from US trading partners in light of the heightened tariffs introduced by Trump.
Broader geopolitical developments and fluctuations in the US dollar are also expected to stay under scrutiny.
Gold's Surge Fueled by Uncertainty and Geopolitical Strains
OCBC analysts Sim Moh Siong and Christopher Wong attribute the ongoing rally in gold prices to investor reactions amid shifting tariff policies and escalating geopolitical concerns, particularly fears surrounding potential US–Iran tensions. The bank views the late January dip as merely a reversion to normal market behavior, rather than an underlying shift in the broader trend. Persistent worries over trade fragmentation and inflation continue to boost the appeal of safe-haven assets, while technical indicators point to further upward potential, with prices holding firm above key support levels.
The Dual Force of Safe-Haven Demand and Technical Momentum
Gold has made a strong recovery, climbing past the 5,220 level and briefly reaching 5,228. This marks an approximately 5% rebound from last week’s low of 4,960. The price movement reflects renewed uncertainty surrounding tariffs and global political dynamics. According to OCBC, the earlier pullback was merely a short-term adjustment rather than a sustained reversal.
Heightened tariff discussions initiated by President Trump have revived interest in safe-haven assets like gold, as investors reassess risks associated with trade fragmentation and its broader impacts on global growth, supply chains, and inflation. Furthermore, persistent tensions between the US and Iran continue to lend support to gold prices.
From a technical standpoint, the metal’s climb beyond the 5,050–5,150 consolidation zone has shifted the short-term forecast in favor of additional gains. Daily chart bearish indications have eased, with the RSI showing strengthened momentum. Immediate resistance lies near recent highs in the 5,230–5,250 range, and a decisive breakout could potentially push prices toward the 5,350 mark.
On the downside, initial support is positioned at 5,120, followed by the 21-day moving average at 5,024 and further at 4,850.
Market Dynamics and Prospects
Growing apprehensions surrounding artificial intelligence, shifting tariffs, and evolving geopolitical events have spurred a typical risk-off approach in financial markets. This has led to increased demand for gold and other safe-haven assets, alongside a drop in bond yields. Currently, investors are closely monitoring developments in chip sector earnings, US–Iran discussions, and indications from the Federal Reserve. Heightened tensions could put short positions on the US dollar in jeopardy of a potential squeeze.
An AI tool contributed to the creation of this article, with editorial review ensuring accuracy and clarity.