Gold News: Trump Tariff Fears Drive XAU/USD Hedging Demand

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Updated: Jan 18, 2025, 07:31 GMT+00:00

Key Points:

Profit-taking and dollar strength slowed gold gains on Friday, but the metal remains resilient ahead of Trump’s inauguration.
Fed rate cut expectations and lower bond yields continue to bolster gold's appeal, despite a stronger U.S. dollar.
Gold holds above $2,700, securing a 0.51% weekly gain, supported by safe-haven demand and Fed rate cut speculation.
XAU/USD nears $2,790 highs as traders hedge against risks tied to Trump’s tariffs and fiscal policy uncertainty.
Traders eye $2,726.30 resistance; a breakout could pave the way to challenge October’s all-time high of $2,790.17.

Gold Steadies with Weekly Gains Ahead of Trump Inauguration

Gold prices slipped on Friday as a stronger U.S. dollar applied light pressure, but the metal held its ground to secure a third consecutive weekly gain. The ongoing uncertainty surrounding incoming President Donald Trump’s policies and renewed speculation over Federal Reserve rate cuts underpinned support for the safe-haven asset.

On Friday, XAU/USD settled at $2736.45, down $7.50 or -0.27%.

Gold Holds Above Key $2,700 Level Despite Pullback

Spot gold maintained levels above $2,700, marking a 0.51% gain for the week. The modest retreat on Friday was attributed to profit-taking rather than a significant market reversal. Earlier in the week, gold reached a one-month high, coming within $65 of its all-time peak at $2,790.17, set in October. Softer U.S. core inflation data further fueled speculation that the Federal Reserve could implement multiple rate cuts, with markets pricing in the possibility of at least two cuts by year-end.

Market Focus Turns to Trump’s Trade Policies

Traders are closely monitoring Trump’s inauguration and anticipated trade policies, which could spark inflation and global trade tensions. Broad tariffs proposed by the incoming administration are seen as potential drivers of gold’s safe-haven appeal, given their capacity to disrupt global markets. These concerns have prompted increased hedging activity, as investors seek protection against downside risks stemming from policy uncertainty.

Fed Governor Christopher Waller’s comments on the potential for additional rate cuts have added to this bullish sentiment for gold, as lower interest rates typically benefit non-yielding assets.

Safe-Haven Demand Reflects Broader Investor Caution

Gold futures showed resilience, driven by safe-haven demand and short-covering on the New York futures market. Despite temporary headwinds from a stronger U.S. dollar, traders view gold as a hedge against potential disruptions tied to Trump’s tariffs and fiscal policies. The precious metal also gained traction as lower bond yields offset some of the greenback’s strength, maintaining its appeal to dollar-sensitive investors.

Gold Prices Forecast: Bullish Momentum in Focus

Gold’s short-term outlook remains positive, supported by safe-haven demand amid geopolitical and economic uncertainties. Sustaining these gains will depend on additional Federal Reserve rate cut expectations and continued dollar weakness. Investors should monitor Trump’s policy announcements for potential market impacts.

Daily Gold (XAU/USD)

Technically, gold has cleared key levels, with the next resistance at the December 12 peak of $2,726.30. A break above this could pave the way toward the all-time high of $2,790.17. On the downside, retracement levels at $2,693.40 and $2,663.51 are critical supports. A decline below the 50-day moving average at $2,645.02 would indicate weakening momentum and could shift sentiment bearish.

Traders should exercise caution as policy changes or shifts in rate expectations could significantly impact gold’s performance.

More Information in our Economic Calendar.

About the Author

James Hyerczykauthor

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.