- Gold reached a new record high of $2,830.70 on Monday.
- China responded to the U.S. with counter-tariffs on American imports on Tuesday.
- Gold remains range-bound as markets react to a softened U.S. stance on tariffs for Mexico and Canada following China's retaliation.
Gold's price (XAU/USD) has reached new all-time highs, prompting traders to carefully consider their next moves in the wake of China's recent retaliatory actions against US tariffs implemented over the weekend. Beijing imposed a 15% tariff on under $5 billion of US energy imports - including coal and liquefied natural gas (LNG) - and a 10% fee on American oil and agricultural equipment. Additionally, China has announced an investigation into Google for alleged antitrust violations. These retaliatory measures have led to uncertainty in the markets, resulting in whipsaw price movements on Tuesday.
On the economic front, the calendar is relatively quiet ahead of the upcoming Nonfarm Payrolls report scheduled for Friday. However, market participants will keep an eye on Tuesday's December JOLTS Job Openings report, as well as remarks from two Federal Reserve speakers: Atlanta Fed President Raphael Bostic and San Francisco Fed President Mary Daly.
Daily Digest Market Movers: Quick Resolve
- In response to President Donald Trump's initial trade war tariffs, China targeted several American companies and imposed levies on select US goods. According to Bloomberg, this response appears designed to send a warning to Trump without jeopardizing China's access to key commodities. The tariffs are slated to take effect on February 10, leaving room for further negotiation.
- European Central Bank member Olli Rhen has suggested that the EU should consider retaliatory measures if President Trump moves forward with additional tariffs, as reported by the Financial Times.
- The December JOLTS Job Openings report is scheduled for release at 15:00 GMT, with expectations that job openings will decline to 8 million from November's 8.098 million.
- At 16:00 GMT, Atlanta Fed President Raphael W. Bostic will moderate a discussion with Atlanta Mayor Andre Dickens at a National Housing Crisis Task Force meeting in Atlanta.
- At 19:00 GMT, San Francisco Fed President Mary Daly is set to join the Walter E. Hoadley Annual Economic Forecast panel hosted by the Commonwealth Club World Affairs of California.
- According to the CME FedWatch tool, there is an 86.5% probability that interest rates will remain unchanged at the March 19 meeting, with only a 13.5% chance of a 25 basis point cut.
Technical Analysis: Setting Off One Another
Following China's counteraction to President Trump's recent tariffs, traders can expect whipsaw moves and headline-driven volatility to dominate the price action going forward. It will be crucial to stay attuned to significant support and resistance levels both intraday and over the longer term.
Key support levels are identified as follows: the first support comes at the $2,800 round figure, followed by $2,790 - November's high - and then Mondays low at $2,772. Should prices break below $2,772, a rapid decline toward $2,721 may occur.
Although some analysts and strategists have forecast a rise to $3,000, the $2,800 region currently appears to be a favorable level for profit-taking. Based on Monday's price action and pivot point analysis, the next daily resistance levels are projected at $2,839 and $2,864, with other significant resistance points at $2,850 and $2,880.
