Gold Soars Amid Tariff Woes: Market Dynamics and Labor Trends Unfold

Gold prices are trading higher on Trump's tariff concerns. It hit a high of $2,670 yesterday and currently trading around $2662.

Labor Market Trends Present Mixed Signals
Recent reports as of January 9, 2025, indicate some changes in the U.S. labor market. The ADP National Employment Report indicates that private sector jobs rose by 122,000 in December 2024, but hiring slowed compared to previous months. Annual pay growth has tapered down to 4.6%, its lowest point since July 2021. FOMC minutes indicate that members discussed inflation, mentioning that the same remains above target, meaning potential future rate adjustments may be called for at some stage. Jobless claims trends suggest a tighter labor market but with slowdown signs in job creation. Overall, these trends indicate a cooling job market as the FOMC remains wary of growth in the economy and inflation. The interplay of these factors will be critical for monetary policy in the months to come.

Trump's Tariff Plans Rattle Financial Markets

Donald Trump's latest pronouncements about the potential imposition of tariffs are causing quite a stir in the financial markets, particularly in the Pound Sterling. He plans to declare a national emergency for the imposition of a 10% tariff on all imports coming into the United States. These measures are making global automobile suppliers like Bosch and Continental sit and think about their respective locations for production to avoid some high tariffs. The analysts feel that these tariffs will be quite challenging for cost increases for consumers and businesses, which will eventually lead to a change in the inflation percentages of the U.S. economy as well as other economies such as the UK and China due to exports on the highest scale with the U.S. In total, Trump's plan for implementing tariffs is drastically altering the market scenario and is raising questions regarding future trade as well as economic stability.

Rate Pause Probability Rises Significantly

According to the CME Fed Watch tool, the chances of a rate pause have increased to 95.2% up from 88.2% a week ago.

Technical Analysis: Support, Resistance, and Trading Strategy

Gold prices are trading above both short-term and long-term moving averages confirming a minor uptrend. Immediate support is at $2,630, and a break below this level could lead to declines toward $2,620, $2,600, $2,570, $2,559, $2,536, and eventually $2,500. The near-term resistance is at $2,670, with potential price targets at $2,700 and $2,775. It is advisable to buy on dips around $2,630, with a stop-loss set at $2,600 and a target price of $2,725.