- summary:
- Investors remain skeptical about the potential impact of tariffs on the economy, which increases macroeconomic factors in favor of a higher gold price.
The price of gold rose to its highest levels in the week on Friday as investors remained cautious on the US dollar amid uncertainty over a potential tariff war. The yellow metal has risen 2% in the last five sessions and is up 5% for the year, confirming strong demand. For context, the price of gold is up 30% in 2024.
Gold price is poised for further gains
The US dollar received some support after PMI S&P Global Manufacturing and Existing Home Sales data beat forecast estimates. The previous print rose 50.1%, beating analysts’ expectations of 49.1%. Likewise, the latter was at 4.24 million homes versus the expected figure of 4.19 million.
Despite the latest US macroeconomic data providing support to the dollar, concerns over brewing tariff wars weighed on the Greenback. Speaking at the World Economic Forum in Davos, US President Donald Trump reiterated his position that China’s trade surplus against the US was unfairly skewed, raising the possibility of tariff measures as early as February.
Furthermore, Trump stated that US tariffs could attract allies such as Canada and the European Union. The resulting sentiment favors an increased safe-haven angle on gold in the coming days. Meanwhile, the yield on 10-year US Treasury notes fell 2 basis points to 4.615, adding support to ongoing gains in the price of gold.
Gold price prediction
Gold price pivots at $2,765 and momentum calls for further upside. With buyers in control, Xauusd will likely move to the first resistance at $2,785. The commodity could break above this level and test the second resistance at $2,795.
On the other hand, momentum will shift to the downside if the gold price drops below $2,765. If that happens, it will likely find immediate support at $2.75. However, extended downside momentum will break below this level and could send the metal to test $2,745.
