- Gold stabilizes after hitting a fresh all-time high of $2,800.93 in early Friday trading.
- On Saturday, the Trump administration will impose 25% tariffs on Canada and Mexico, raising concerns of a potential trade war.
- Gold's record high could be retested if US PCE data comes in weaker than expected.
Gold (XAU/USD) remains flat, hovering just below its all-time high of $2,800.93, as traders take profits ahead of key inflation data. Meanwhile, geopolitical tensions escalate after US President Donald Trump confirmed 25% tariffs on Canada and Mexico, effective Saturday, and reiterated his 100% tariff threat against BRICS nations if they attempt to introduce a new currency to challenge the US Dollar. These developments could act as a headwind for bullion, fueling trade war fears and inflationary pressures in the US.
Investors are now turning their attention to the US Personal Consumption Expenditures (PCE) Price Index for December, the Federal Reserve's preferred inflation gauge, set for release later in the day. Expectations point to a modest increase, with the core PCE projected to rise 0.2% month-over-month (up from 0.1% in November), while the headline PCE is expected to tick up 0.3% from 0.1%.
Daily Market Movers: US PCE to Drive Volatility
- Trump's Tariffs Take Center Stage: The Trump administration is set to impose 25% tariffs on $900 billion worth of imports from Canada and Mexico starting Saturday, potentially triggering retaliatory measures from affected countries.
- Gold's Record High Fueled by Weak US GDP: On Thursday, bullion hit a new all-time high after US Q4 GDP came in softer than expected, signaling slowing economic growth.
- Trump's Renewed Threats Against BRICS: Trump reiterated his stance against BRICS nations forming an alternative currency, stating on TruthSocial: "We are going to require a commitment from these seemingly hostile countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty US Dollar - or they will face 100% tariffs."
- US PCE Data Release at 13:30 GMT: Market watchers expect core PCE inflation to rise 0.2% MoM, while headline PCE is forecast at 0.3% MoM, potentially influencing Fed policy expectations.
- Potential Volatility on Monday: Markets could experience heightened volatility at the start of next week as Trump's tariffs on Canada and Mexico take effect over the weekend.
Technical Analysis: Profit-Taking Risks Loom for Gold
Gold spiked to a fresh all-time high of $2,800.93 early Friday, raising the possibility of profit-taking. Historically, tariffs are viewed as inflationary, which could pressure gold prices lower, especially if US inflation data exceeds expectations later in the session.
Key Support Levels:
- $2,721 - A major level tested in November, December, and January before breaking on January 21.
- $2,709 - The October 23, 2024 low, serving as a secondary support.
- $2,680 - A potential target in case of a deeper sell-off.
Key Resistance Levels:
- $2,800 - The psychological barrier and recent all-time high.
- $2,809 & $2,824 - Key daily resistance levels based on Thursday's price action.
- $3,000 - A long-term target set by analysts and strategists.
If US inflation data surprises to the upside, gold could face selling pressure, potentially driving prices lower. However, continued economic uncertainty and geopolitical risks may provide underlying support for bullion.
