Gold prices hit a fresh all-time high as Trump pauses trade tariffs for one month against Canada and Mexico. It hit a high of $2830 and currently trading around $2815.
Economic Concerns and Gold's Safe-Haven Status
On February 4, 2025, former President Donald Trump announced a 30-day pause on planned 25% tariffs on imports from Canada and Mexico, which were set to begin on February 1. The pause is seen as an attempt to push trade negotiations forward and avoid increased tensions between the two countries. Analysts are concerned that the tariffs could reduce U.S. economic output by about 0.4% and increase consumer prices. The uncertainty may also affect the price of gold as investors seek safety during economic instability. Trump's future trade plans include potentially broader tariffs, reflecting his focus on protecting American industries and addressing trade imbalances.
Positive Signs in U.S. Manufacturing Sector
The US ISM Manufacturing PMI for January 2025 is at 50.9%, thus recording the first instance of a rise in the manufacturing sector in 26 months. It rose from 49.2% for December 2024. The New Orders Index increased to 55.1%, and the Production Index increased to 52.5%, reporting positive growth. The Employment Index also recorded a rise to 50.3%, and it points to job stability in that sector. Overall, it shows that the economy remains to expand with the current condition of manufacturing getting better.
Rate Pause Sentiments Climb
According to the CME Fed Watch tool, the chances of a rate pause on the Mar 19th, 2025 meeting have increased to 86.50% up from 68.50% a week ago.
Technical Analysis: Key Levels and Trading Strategy
Gold prices are holding above the short-term moving averages 34 EMA and 55 EMA and long-term moving averages (200 EMA) in the 4-hour chart. Immediate support is at $2745 and a break below this level will drag the yellow metal $2720/$2700/$2670/$2660/$2650/$2,630,$2600/ $2,570, $2,559, $2,536, and eventually $2,500. The near-term resistance is at $2775, with potential price targets at $2790/$2810. It is good to buy on dips around $2725-27, with a stop-loss at $2700 for a target price of $2790/$2810.