- Gold price attracts some sellers for the second straight day amid a modest USD uptick.
- The overnight hawkish remarks from Fed Chair Powell revived USD demand.
- Trade war fears should help limit any corrective slide for the safe-haven XAU/USD pair.
Gold price (XAU/USD) attracts some sellers for the second straight day on Wednesday and currently trades around the $2,885 region, down nearly 0.45% for the day. Federal Reserve (Fed) Chair Jerome Powell’s hawkish remarks on Tuesday helped revive the US Dollar (USD) demand and turned out to be a key factor weighing on the non-yielding yellow metal. Moreover, a positive risk tone further seems to undermine the safe-haven commodity amid slightly overbought conditions on the daily chart.
That said, concerns about the potential economic fallout from US President Donald Trump’s trade tariffs and a global trade war might continue to act as a tailwind for the Gold price. Traders might also refrain from placing aggressive bets and opt to wait on the sidelines ahead of the release of the latest US consumer inflation figures later during the North American session. This, in turn, warrants some caution before positioning for any meaningful corrective fall from the all-time peak touched on Tuesday.
Gold price bulls remain on the sidelines amid reviving USD demand, ahead of US CPI
- Federal Reserve Chair Jerome Powell, in remarks before the Senate Banking Committee on Tuesday, called the economy strong overall with a solid labor market and said that inflation is easing but still above the 2% goal.
- This comes on top of Friday’s mostly upbeat US employment details and expectations that US President Donald Trump’s policies would reignite inflationary pressure, which could allow the Fed to stick to its hawkish stance.
- The US Dollar gains some positive traction in the wake of rising bets that the Fed would hold interest rates steady in the foreseeable future and exert pressure on the Gold price for the second consecutive day on Wednesday.
- US President Donald Trump signed executive orders to impose 25% tariffs on steel and aluminum imports into the US and promised broader reciprocal tariffs to match the levies other governments charge on US products.
- Trump also signaled he would look at imposing additional tariffs on automobiles, pharmaceuticals, and computer chips, which fueled worries about a global trade war and acts as a tailwind for the safe-haven precious metal.
- Investors now look forward to the release of the latest US consumer inflation figures for fresh cues about the Fed’s rate-cut path and determining the near-term trajectory for the USD and the non-yielding yellow metal.
- The headline US Consumer Price Index is seen rising 2.9% YoY in January and the core CPI (excluding food and energy prices) coming in at a 3.1% YoY rate, slightly lower than the 3.2% recorded in the previous month.
Gold price is likely to stall its corrective slide near the $2,855-2,852 pivotal support
From a technical perspective, the overnight Relative Strength Index (RSI) on the daily chart turns out to be a key factor that prompts some profit-taking around the Gold price. That said, any further slide might still be seen as a buying opportunity and remain limited near the $2,855-2,852 region. This is followed by support near the $2,834 area, which if broken could drag the XAU/USD further towards the $2,800 mark.
On the flip side, bulls might now wait for a move back above the $2,910 immediate hurdle before placing fresh bets. The subsequent move up could lift the Gold price back towards the $2,942-2,943 region, or the all-time peak touched on Tuesday. Some follow-through buying would set the stage for an extension of the recent well-established uptrend witnessed over the past two months or so.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | 0.01% | 0.69% | 0.07% | 0.09% | 0.07% | 0.00% | |
| EUR | -0.05% | -0.04% | 0.64% | 0.00% | 0.04% | 0.01% | -0.06% | |
| GBP | -0.01% | 0.04% | 0.67% | 0.06% | 0.08% | 0.06% | -0.01% | |
| JPY | -0.69% | -0.64% | -0.67% | -0.62% | -0.60% | -0.63% | -0.69% | |
| CAD | -0.07% | -0.01% | -0.06% | 0.62% | 0.03% | 0.00% | -0.07% | |
| AUD | -0.09% | -0.04% | -0.08% | 0.60% | -0.03% | -0.02% | -0.10% | |
| NZD | -0.07% | -0.01% | -0.06% | 0.63% | -0.00% | 0.02% | -0.07% | |
| CHF | -0.00% | 0.06% | 0.01% | 0.69% | 0.07% | 0.10% | 0.07% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
Source: Gold hangs near daily low amid modest USD strength; looks to US CPI for fresh impetus
