Gold Reaches New All-Time Highs After Tariff Announcements

Recent bullish movements in gold have pushed its price up by more than 2% over the past three sessions, reaching a new all-time high zone at $2,800 per ounce. This strong movement has been driven by market uncertainty regarding the possibility of a new trade war.

Tariffs Shake the Markets

President Trump has confirmed the implementation of new tariffs on certain countries, which will take effect on February 4. So far, a 25% tariff has been applied to all imports from Canada and Mexico, along with an additional 10% tariff on oil and gas products from Canada. Additionally, a 10% tariff has been imposed on all products imported from China. The White House has justified these measures as part of its efforts to combat illegal migration and drug trafficking.

Responses from affected nations were swift. Canadian Prime Minister Justin Trudeau announced retaliatory tariffs against the United States. Meanwhile, Mexico declared that it will implement new economic measures to counteract the White House's threats. The European Union has also warned that strict measures will be taken if tariffs are imposed on EU member states.

For now, the situation remains critical, and confidence in international markets has rapidly deteriorated. The CNN Fear and Greed Index has fallen to 41, quickly shifting into the "fear" zone, indicating that uncertainty about a potential global trade conflict could negatively impact demand for financial assets. This has led to significant declines in major stock indices, with the S&P 500, DAX, and Nikkei all dropping by more than 2% in recent trading hours, reflecting the growing fear surrounding new tariffs.

Source: CNN

Amid this environment of global tension, gold has reinforced its role as a key safe-haven asset. Demand for the precious metal has risen considerably as economic uncertainty increases. So far, XAU/USD remains one of the most relevant assets for capital protection during times of crisis. If tariff announcements continue to generate market volatility, gold may experience increased buying pressure in the short term.

Gold Technical Forecast

Source: StoneX, Tradingview

• Strong Trend: Since mid-February 2024, gold has maintained a strong upward trend, now reaching new all-time highs above $2,800 due to the growing interest in the precious metal. The 50- and 100-period moving averages continue to show a bullish slope and have begun to widen, indicating the strength of recent buying activity. However, the pace of buying is high, which could lead to short-term bearish corrections near the current resistance zone.

   

• Possible Overbought Conditions:

   

  • MACD: Both the MACD line and the signal line are approaching levels not seen since October 2024, reflecting an accelerated increase in buying pressure.

     

  • RSI: The RSI line has climbed rapidly and is now oscillating above the 70 level, signaling a possible overbought zone and an imbalance between buying and selling pressure.

  Both indicators suggest that gold may be overbought, which could lead to bearish corrections in the upcoming trading sessions.

   

  Key Levels:

   

• $2,780: A new support level derived from previous gold all-time highs. This could serve as a potential area for short-term bearish corrections.

   

• $2,710: A key support level that coincides with consolidation zones from recent months. A drop below this level could raise doubts about the current bullish formation and open the door to a more pronounced bearish bias.

   

• $2,850: A new tentative resistance level. If the price reaches or surpasses this level, it could confirm continued buying strength and extend the bullish trend in the coming sessions.

Written by Julian Pineda, CFA – Market Analyst