GOLD Analysis
Afternoon: Gold Drops Amid Stronger US Dollar and Fresh Tariff Announcements
Highlights:
- Gold drops to below $2,875 as the US dollar strengthens amid fresh Trump tariffs.
- US GDP growth holds at 2.3% in Q4, but rising jobless claims raise concerns.
- China’s gold demand weakens, with Swiss shipments to China plummeting 99%.
Overview:
Gold prices continued their decline, sinking to $2,875 per ounce, as the US dollar strengthened following new tariff announcements by President Donald Trump. The fresh 25% tariffs on Canada and Mexico—set to take effect next week—were a surprise, as Treasury Secretary Bessent had earlier signaled them for April. Additionally, Trump imposed new trade restrictions on China and the European Union, further boosting the US dollar and making gold less attractive for international buyers.
On the economic front, updated US GDP data indicated a 2.3% annualized growth rate for the fourth quarter of 2024, signaling steady expansion. However, concerns over an economic slowdown lingered, as rising unemployment claims cast doubt on the strength of the US labor market. A weaker labor market could prompt the Federal Reserve to cut interest rates sooner than expected, which may support gold in the medium term.
Meanwhile, physical gold demand showed signs of weakness, particularly in China. Chinese gold imports via Hong Kong hit their lowest level in nearly three years in January. Additionally, Swiss customs data last week revealed an astonishing 99% drop in gold shipments to China, raising concerns about declining appetite for the metal in a key consumer market.
Despite these headwinds, gold remains a safe-haven asset, and its movement will largely depend on upcoming US economic data and the Federal Reserve’s stance on interest rates. The Core PCE Price Index, the Fed’s preferred inflation gauge, will be closely watched, as well as the Chicago PMI and Goods Trade Balance reports from the United States.
Trade Strategy:
???? Action: Sell on jump near $2,885
???? Target: $2,858
???? Stop Loss: Above $2,900
Support and Resistance Levels:
