By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
The uncertainty surrounding US President Donald Trump’s trade policy keeps investors on edge, and it continues to act as a tailwind for the gold market as the new week begins. Furthermore, investors remain concerned that Trump’s protectionist tariffs would hinder US economic growth and force the Federal Reserve to resume rate cuts in June.
In reality, Trump shifted gears on his tariff plan, stating that looming duties on Canada may or may not occur on Monday or Tuesday. This comes just a day after the Trump administration temporarily cancelled the 25% hefty tariffs on goods from Canada and Mexico that conform with the US-Mexico-Canada Agreement for one month.
Last week, US President Donald Trump issued an executive order on Thursday exempting goods from both Canada and Mexico from the North American trade pact known as USMCA, two days after implementing it. However, US Commerce Secretary Howard Lutnick stated late Sunday that the 25% tariffs on steel and aluminium imports, which are scheduled to take effect on Wednesday, are unlikely to be postponed. The uncertainty surrounding Trump’s tariff policy is expected to increase safe-haven flows, supporting the gold price in the short run.
Furthermore, the labour market in the United States weakened last month. According to the article, the Federal Reserve plans to decrease interest rates multiple times this year. This, in turn, weighs on the US dollar and raises USD-denominated commodities prices.
Traders are now anticipating three rate cuts of 25 basis points apiece by the Fed by the end of the year. This, in turn, causes a new leg lower in US Treasury bond yields, keeping USD bulls on the defensive. Despite the supportive considerations, the non-yielding precious metal has struggled to attract major purchasers, so bulls should exercise caution. Traders and investors are responding to a severe and unexpected downturn in US economic data.
Gold Apr Futures are trying to build a base before moving higher above $3000 and are projected to remain supported at $2885 (about Rs 85400). Prices need to persist at $2940 (~Rs 86300) to continue their upward trend to $3000 (~Rs 87500) and above.
Gold Apr Futures Daily Chart
Silver has been trading in an uptrend for the last year, with prices taking support at the uptrend line. Now the support lies at $31 (~Rs 92000). On the upside, the resistance is $33 (~Rs 96000) and $34(~Rs 97500).
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