- Gold recovers losses after a turbulent weekend marked by developments on tariffs and deportations.
- U.S. tech stocks tumble on Monday, with the Nasdaq dropping over 3%.
- Gold retreats slightly, falling short of reaching a new all-time high
Gold prices (XAU/USD) dip below $2,770 as of Monday, following a weekend dominated by nervous, headline-grabbing developments. Looking ahead, markets brace for a busy week, with several central banks set to announce rate decisions.
Over the weekend, it became clear why U.S. President Donald Trump has softened his stance on using tariffs as a routine tool. Instead, tariffs are being deployed as leverage, particularly against countries that refuse to accept deported U.S. immigrants. On Sunday, Colombia faced this strategy when President Trump imposed a 25% emergency tariff, threatening to raise it to 50% within a week if the country did not comply with deportation demands. However, the White House later announced that Colombia had agreed to all of President Trump’s terms, including unrestricted acceptance of deported Colombian nationals, leading to the tariffs being put “on hold.”
Later this week, the Federal Reserve (Fed) and European Central Bank (ECB) will announce their policy rate decisions on Wednesday and Thursday, respectively. Meanwhile, a Chinese open-source AI startup rattled markets, raising concerns about the lofty valuations of tech giants like Nvidia and contributing to the Nasdaq’s sharp decline.
Daily Market Movers: Focus on Rate Decisions
- Gold’s outlook remains strong, supported by robust central bank demand. The precious metal continues to gain traction as an alternative reserve asset, according to Kotak Securities Ltd, as reported by Bloomberg.
- Gold prices dipped as the US Dollar (USD) strengthened after President Donald Trump paused proposed tariffs on Colombia, following a deal on the return of deported migrants, Reuters reports.
- The CME FedWatch tool predicts no change in the policy rate at the upcoming Federal Reserve meeting. For the May decision, the probability of a 25 basis point rate cut stands at 43.8%, compared to 45.4% for no change.
Technical Analysis: Gold Faces Challenges Amid Tariff Concerns
Gold’s rally loses momentum this Monday, following President Donald Trump’s weekend demonstration of how and when tariffs will be applied. The move sparked market jitters, reinforcing concerns that Trump remains firm on tariff policies. Meanwhile, Gold’s daily chart shows the Relative Strength Index (RSI) reaching overbought levels, signaling potential selling pressure ahead.
The first support level lies at $2,721, reflecting a double top from November and December that was broken on January 21. Below that, $2,709 (the October 23, 2024, low) serves as a secondary support. If both levels fail, Gold could drop to $2,680, potentially triggering a broader sell-off.
On the upside, Gold remains within reach of its all-time high at $2,790, just 1% above current levels. A break above this threshold could pave the way for new record highs. While some analysts foresee Gold reaching $3,000, $2,800 is shaping up as the next key resistance level in the short term.
