FxWirePro- Gold Trade Idea

Gold prices trade flat ahead of Trump’s inauguration. It hit an high of $2724.80  and currently trading around $2706.

As of January 20, 2025, Donald Trump's aggressive tariff policies to support U.S. manufacturing are severely impacting the economy and the U.S. dollar. His commitment to tariffs is believed to protect American industries by strengthening the dollar as investors would expect better trade conditions. Still, such tariffs may raise prices for consumers and businesses dependent on imported goods. According to studies, the imposition of tariffs can increase intermediate goods by 10% to 30%, thereby increasing overall consumer prices. This inflation might reduce purchasing power and cause a more general problem in the economy. Although the dollar may gain strength, there is a prospect of increased cost and inflation that is causing unease in the economy. This may lead to a tighter money policy by the Federal Reserve that could strengthen the U.S. Dollar. Gold prices, therefore, may receive more pressure hence becoming lower.

Rate Pause Sentiments Climb

According to the CME Fed Watch tool, the chances of a rate pause have increased to 99.50% up from 97.90% a week ago.

Technical Analysis: Key Levels and Trading Strategy

Gold prices are holding above short-term moving averages of 34 EMA and 55 EMA and long-term moving averages (200 EMA) in the 4-hour chart. Immediate support is at $2,670, and a break below this level will drag the yellow metal $2660/$2650/$2,630,$2600/ $2,570, $2,559, $2,536, and eventually $2,500. The near-term resistance is at $2710, with potential price targets at $2725/ $2,750-/$2775. It is good to buy on dips around $2680, with a stop-loss  at $2,640 for a target price of $2,775/$2790.