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The price of gold rose today, as increased uncertainty regarding US trade policy destabilized markets and weakened the dollar.
During Asian trading, the price of the precious metal jumped by 1.4%, approaching $5,180 per ounce, after President Donald Trump announced last Saturday that he would impose a 15% global tariff to maintain previously enacted measures. Recall that the day before, the Supreme Court ruled against his use of emergency powers to impose tariffs.
This statement caused anxiety among investors, who are concerned about the escalation of trade wars and their negative impact on the global economy. Gold, traditionally considered a safe-haven asset, benefited from this situation as investors sought safe harbors for their capital. The weakening of the dollar also played to gold's advantage, making it more attractive to buyers holding other currencies.
The further price movement for gold will depend on developments in trade. If tensions continue to escalate, gold is likely to keep rising. However, if any agreements can be reached, we may see a downward correction in prices.
It is evident that the court's decision has raised doubts about agreements the US has made with major trading partners, returning uncertainty to markets. The head of the European Parliament's trade committee stated that he would propose postponing the ratification of the agreement with Washington until more clarity emerges, while Indian officials have also announced a postponement of a trip to the US. A member of Japan's ruling party described the situation as a real mess.
It is worth noting that the rise in gold prices has helped it recover from the sudden drop at the beginning of the month, which had pushed prices down from their historic highs. The increase is driven by the fact that many long-term factors favoring this commodity—including heightened geopolitical tensions and investor caution regarding government bonds and currencies—remain unchanged.
The strengthening of gold amidst the reduced positions of hedge funds indicates further growth potential. Data from the Commodity Futures Trading Commission shows that the net long position in gold futures has fallen to its lowest level in almost a year.
Recall that the situation in the Middle East remains tense, as traders observe the standoff between Washington and Tehran. While the two countries are negotiating a potential agreement on Iran's nuclear program, the US has concentrated massive military forces in the region, raising concerns over possible localized strikes or full-scale conflict.
For buyers, the nearest resistance at $5,223 must be taken. This will allow targeting $5,317, above which it will be quite challenging to break through. The furthest target will be around $5,416. In the event of a decline in gold, bears will attempt to take control of $5,137. If they succeed, a breakout from this range will deliver a significant blow to the bulls' positions, pushing gold down to a low of $5,051 with the prospect of reaching $4,975.
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