Gold prices remain subdued following a market rout triggered by AI startup DeepSeek and President Trump's renewed calls for higher global tariffs. The impact of global trade tensions and potential inflationary pressures are weighing on gold's performance.
Gold prices remained subdued on Tuesday, hovering ahead of the US trading session following a significant market decline on Monday. This downturn was triggered by the Chinese AI startup DeepSeek, which led to a major market shakeup, wiping out over $550 billion in market capitalization from Nvidia alone. The tech sector's volatility had a ripple effect on cryptocurrencies, with Bitcoin experiencing a drop of over 6.5% as a spillover victim.
President Donald Trump capitalized on this market instability, reiterating his demand for higher global tariffs. He believes this will safeguard US tech companies from China's competitive strategies. However, tariffs are typically inflationary, leading to higher yields, which can negatively impact gold prices. Later this week, the Federal Reserve (Fed) and the European Central Bank (ECB) will announce their policy interest rates on Wednesday and Thursday, respectively. Additionally, Barrick Gold and Mali are set to resume negotiations on Tuesday to address a dispute regarding alleged unpaid taxes and the seizure of Barrick's gold stocks by Malian authorities. Technical analysis suggests that gold's price rally may face further downward pressure. Trump's recent tariff threats, coupled with concerns about inflation, could lead to higher yields and potentially postpone any rate cuts in 2025, creating headwinds for gold. The initial support level for gold is around $2,721, a double top seen in November and December that was broken on January 21. Just below this level lies $2,709, a previous low from October 23, 2024. If both of these support levels are breached, a significant drop back to $2,680 could occur. While the window of opportunity for reaching a new all-time high of $2,790 is closing, it is still within reach, representing a roughly 2% increase from current levels.Once gold surpasses this level, a fresh all-time high will be established. Some analysts and strategists predict a price of $3,000, but $2,800 appears to be a more realistic starting point for further resistance
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