Gold price approaches weekly high as tariff jitters boost safe-haven demand
Gold price(XAU/USD) is gaining positive traction for the third consecutive day on Friday and approaching the top end of its weekly range amid rising trade tensions. In a dramatic escalation of trade wars, US President Donald Trump this week issued notices to a slew of trading partners, outlining individual tariffratesstarting August 1 in the absence of any trade deals. This keeps investors on edge and takes its toll on the global risk sentiment, which, in turn, is seen as a key factor acting as a tailwind for the safe-haven precious metal.
Meanwhile, traders scaled back their expectations for an immediate interest rate cut by theFederal Reserve(Fed) following the release of the upbeat US monthly jobs report last week. This assists theUS Dollar(USD) to stand tall near its highest level in more than two weeks touched on Thursday, and might hold back traders from placing aggressive bullish bets around the non-yielding Gold price. Hence, it will be prudent to wait for strong follow-through buying before positioning for any further near-term appreciating move for the XAU/USD pair.
Daily Digest Market Movers: Gold price continues to attract safe-haven flows amid trade jitters
Gold price needs to climb beyond $3,340 to back the case for further near-term appreciation
From a technical perspective, some follow-through buying beyond the $3,340-3,342 horizontal barrier will confirm a breakout through the 100-period Simple Moving Average (SMA) on the 4-hour chart. This, along with slightly positive oscillators on the said chart, should pave the way for a further near-term appreciating move and lift the Gold price to the next relevant hurdle near the $3,360-3,362 region. The momentum could extend further and allow the XAU/USD pair to reclaim the $3,400 mark.
On the flip side, weakness below the $3,326 immediate support could attract some dip-buyers and help limit the downside for theGoldprice near the $3,300 round figure. This is followed by the $3,283-3,282 region, or over a one-week low touched on Tuesday. A convincing break below the latter would make the XAU/USD pair vulnerable to accelerate the fall towards the July swing low, around the $3,248-3,247 area.
Tariffs FAQs
What are tariffs?
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.
What is the difference between taxes and tariffs?
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.
Are tariffs good or bad?
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.
What is US President Donald Trump’s tariff plan?
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.
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