Gold prices show resilience as the market reacts to news of the Trump administration's potential gradual implementation of tariffs to avoid inflation. Traders remain watchful for economic data releases, especially the PPI and CPI, which could influence US yields and the Fed's policy outlook.
Gold prices are attempting to recover from Monday's decline sparked by concerns surrounding the Federal Reserve 's (Fed) policy rate. The market sentiment shifted Tuesday after reports emerged that the incoming Trump administration is considering a gradual implementation of its tariff plans to mitigate the risk of an inflation surge. Sources close to the matter revealed that the administration is deeply concerned about an inflationary shock and is determined to avoid it.
Traders are closely monitoring economic indicators, particularly the Producer Price Index (PPI) due for release on Tuesday and the Consumer Price Index (CPI) on Wednesday. A significant upside surprise in the PPI could fuel expectations for a hot CPI reading, leading to a surge in US yields and potentially offsetting the positive reaction to the gradual tariff news. Such a scenario could further diminish the chances of any rate cuts by the Fed in 2025. Technical analysis suggests that gold has slipped back into a broader pennant chart formation it has been trading within since November. The immediate risk is that the upper boundary of the pennant becomes a resistance level again. A strong rejection from this level could trigger another downward move towards $2,650 and lower. Support levels to watch include the 55-day Simple Moving Average (SMA) at $2,650 and the 100-day SMA at $2,635. The ascending trend line at the lower boundary of the pennant currently stands at $2,615. On the upside, the October 23 low at $2,708 is a key level to break through, with the all-time high of $2,790 as the ultimate target.
GOLD INFLATION TARIFFS FEDERAL RESERVE US ECONOMY MARKET SENTIMENT PPI CPI US YIELDS TECHNICAL ANALYSIS
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