Gold Stuck in a Rut This Tuesday after More Tariff Details Even Hurt Precious Metals
An Outlier Day for Gold This Tuesday with Losses on the Quote Board
The gold price (XAU/USD) refuses to break its grueling pattern of falls, despite the ongoing trade tensions and global economic uncertainty. The absence of a clear direction in the market has led to a significant loss of momentum, with gold’s price hovering around $2,935, representing a significant departure from its all-time high of $2,956 reached just hours prior to the Trump administration’s announcement of more tariffs on China.
Daily Digest Market Movers: Fed Remains Silent
The current market landscape is marked by a sense of unease, with investors seeking shelter in bonds and siding against equities. This shift in sentiment is attributed to the revived concerns over global trade tensions and the advent of further tariff restrictions. The market anticipates the Federal Reserve’s highly-anticipated rate decision on Friday, but the recent decline in US yields has reduced the chances of an interest rate cut to 50.0%, according to the CME FedWatch tool.
Market Developments
- The Trump administration tightens restrictions on China’s technological developments, including stricter semiconductor curbs and pressing allies to restrict China’s chip industry. The goal is to curb China’s domestic semiconductor industry, which could heighten its AI and military capabilities, according to Bloomberg.
- The CME FedWatch tool projects a 50.0% chance of a 25-basis-point interest rate cut by June, down from 64.8% earlier.
- Investors are tuning in to the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, which is expected to slow to its slowest pace since June, according to Reuters.
Technical Analysis: US Session to Become Interesting
- A quick dip below the daily Pivot Point at $2,943 signals a concern for gold, as selling pressure is present and buyers have failed to reclaim the daily Pivot in early Asian trading.
- The S1 support at $2,930 has held for now, but a break below this level could see the S2 support come into play at $2,908.
Tariffs FAQs
- Tariffs are customs duties levied on specific merchandise imports or categories of products.
- Tariffs are designed to support local producers and manufacturers, giving them a competitive edge in the market.
- Tariffs are used as a tool of protectionism, along with trade barriers and import quotas.
As the global economy continues to navigate uncertainty, gold’s price is expected to remain under pressure. With the Trump administration’s tariffs expected to continue, investors are advised to be cautious, as the precious metal’s prospects for a rebound seem uncertain. Will gold overcome its current rut and make a comeback, or will the ongoing tariff tensions continue to weigh on its price? Only time will tell.
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