- Gold price rises for the second consecutive day, hovering around the key technical level of $2,655.
- President-elect Donald Trump is reportedly considering an economic state of emergency, which would enable swift imposition of global tariffs.
- Despite this, gold remains trapped in a broad pennant formation, though it is beginning to test upside levels.
Gold (XAU/USD) rallies for the second straight day, trading near $2,660 on Wednesday, following a sharp rise in the Institute of Supply Management’s (ISM) Services Prices Paid index, which surged to 64.4 in December from 58.2 in November. This signals rising inflationary pressures in the services sector. Meanwhile, bond yields climb and equities drop after CNN reported that President-elect Donald Trump is considering declaring a national economic emergency to swiftly impose universal tariffs, citing sources close to the matter.
On the economic data front, all eyes are on the release of the Federal Open Market Committee (FOMC) minutes later today, with traders seeking insights into the Fed’s interest rate plans and policymakers’ views from the December meeting. Additionally, the US Treasury is set to auction a 10-year note, with the benchmark rate recently hitting a nine-month high of 4.697%.
Daily Digest: Market Movers - Tariff Threats on High Alert
- President-elect Donald Trump is considering declaring a national economic emergency to justify a broad scheme of universal tariffs, according to sources cited by CNN and Bloomberg.
- Federal Reserve Board Governor Christopher J. Waller spoke on the US economic outlook in Paris, expressing his belief that inflation will continue to ease toward the Fed’s 2% target, supporting his call for additional interest rate cuts this year.
- The US Treasury will allocate a 10-year note at 18:00 GMT. Market concerns are rising due to elevated rate levels and lackluster demand in recent shorter-term auctions, which typically see strong interest.
- At 19:00 GMT, the Fed will release the minutes from its December FOMC meeting, offering insights into the central bank’s decision-making.
- Following the release of the ISM Services PMI for December, traders pushed back the earliest expected rate cut from the Fed to July 2025, from the previously anticipated June.
- President-elect Donald Trump reiterated in a Mar-a-Lago press conference that US rates will need to be reduced, according to Bloomberg.
Technical Analysis: Tariff Threats Resurface as Gold Tests Upside
Gold is currently testing the upside after several failed attempts to break above the 55-day Simple Moving Average (SMA). With support from recent ISM data, the upcoming US bond auctions could provide the catalyst needed for Gold to finally push higher.
On the downside, the 100-day SMA at $2,630 is holding firm after a brief break on Monday. Below this, the ascending trendline of the pennant pattern, which has provided support around $2,610 on three previous occasions, remains in play. If this support breaks, a swift drop to $2,531 (the August 20, 2024 high) could offer the next level of support.
To the upside, the 55-day SMA at $2,654 is the first hurdle to overcome, and it is currently being tested. It has proven to be strong resistance twice last week. If Gold breaks above this level, the next key target will be $2,686, marked by the descending trendline within the pennant formation.
