📊 Gold rises due to persisting safe-haven demand
Gold (XAU) price rose 0.8% on Tuesday as safe-haven demand remained strong amid growing concerns over U.S. President Donald Trump's proposed trade tariffs and their impact on the global economy.
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Possible effects for traders
Apart from the uncertainty surrounding the U.S. trade policy, a weaker-than-expected U.S. Consumer Confidence report also boosted the gold price yesterday. In addition, the recovery may have also been due to a technical rebound in other assets following a technical downturn in the previous session. 'I think some of the biggest factors are Trump's comments yesterday in regards to tariffs ... and right now, the correlation with gold is a basket of geopolitics and inflation expectations', said Daniel Pavilonis, senior market strategist at RJO Futures.
Yesterday, Donald Trump announced his intention to impose tariffs on imported computer chips, pharmaceuticals, and steel, aiming to encourage producers to manufacture these goods in the U.S. Investors view these policies as potentially inflationary and fear they could spark trade wars, further boosting safe-haven demand for gold. Fundamentally, gold remains in a bullish trend. 'We're not even that far away from all-time highs, so the upward momentum is there, we just need some kind of trigger to get it going', said Phillip Streible, chief market strategist at Blue Line Futures.
XAUUSD was flat during the Asian and early European trading sessions. Today's important event is the Federal Reserve (Fed) interest rate decision, due at 7:00 p.m. UTC. Traders expect the Fed to leave the rates unchanged. The main focus will also be on Fed Chair Jerome Powell's commentary as markets analyse the perspective of the U.S. monetary policy for 2025. The market usually moves not because of the decision but because of the new details revealed in the FOMC Statement and during the press conference. If the Fed downgrades its economic forecast and Powell hints that more rate cuts are coming, XAUUSD will likely rise significantly. If the FOMC statement includes better economic assessments and the Fed chair makes hawkish statements or sounds less dovish, XAUUSD may drop slightly.
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