- Gold price stabilizes just above $3,120 on Wednesday ahead of Trump’s announcement.
- Markets are bracing for the official announcement of the implementation of reciprocal tariffs.
- Gold traders might unwind the Gold rally, should the size of tariffs be far less severe than anticipated.
Gold price (XAU/USD) stabilizes just above $3,130 at the time of writing on Wednesday after a reversal move the prior day after a fresh all-time high got eked out at $3,149 before closing in negative territory. The Gold rush rally stalled ahead of United States (US) President Donald Trump officially announcing the reciprocal tariff implementation later this Wednesday at the White House with his entire cabinet present. However, with uncertainty building up towards this day, the announcement itself could be less impactful than initially thought, resulting in a sharp correction for Gold this week as a “buy the rumour, sell the news” event.
Meanwhile, traders are gearing up for the always-important private sector employment data provided by Automatic Data Processing (ADP). Although there is no proven correlation with the Nonfarm Payrolls (NFP) release on Friday, traders still see it as a litmus test. Expectations are for a surge of 105,000 new employment in private jobs in March, compared to 77,000 in February. This could make sense as the Department of Government Efficiency (DOGE) has been trying to push public sector employees towards private jobs.
Daily digest market movers: Late trading hours
- The White House has been reluctant to provide details of the targets and scale of the levies, which will be applied right after they are rolled out at the 20:00 GMT event in Washington this Wednesday. The pending announcement has driven a new wave of volatility, including a US stock selloff. While uncertain times are generally good for Gold, investors are keen to see the impact of the next set of levies on trade, the global economy and geopolitics, Bloomberg reports.
- The CME FedWatch tool sees chances for a rate cut in May standing at 15.8%. A rate cut in June is still the most plausible outcome, with only a 25.6% chance for rates to remain at current levels.
- Huaan Yifu Gold ETF, the largest such investment vehicle in China, received record inflows of 1.4 billion Yuan ($194 million) on Monday. Followed by another 1 billion Yuan, the second-highest, on the following day. The frantic pace of buying means Gold ETFs now have the biggest assets under management among all commodity-related peers in China, Reuters reports.
Gold Price Technical Analysis: A bomb or a dud
Again, this is a “parental advisory” just ahead of the main event for this Wednesday. With the primary tailwind for the Goldrush set to be officially announced, the “buy the rumour, sell the fact” rule of thumb should be considered. The risk could be that once the reciprocal tariffs take effect on Wednesday, only easing due to profit-taking in Gold could occur once separate trade agreements and partial unwinds take place.
On the upside, the daily R1 resistance at $3,141 is the first level to consider, followed by the $3,149 all-time high. Further up, the R2 resistance at $3,169 could still be targeted later in the day. Beyond that, the broader upside target stands at $3,200.
On the downside, the S1 support at $3,093 is quite far, though it could still be tested without completely erasing this week’s gains. Further down, the S2 support at $3,073 should ensure that Gold does not fall back below $3,000.
XAU/USD: Daily Chart
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.