Gold price rose to historic highs of $3,005 per ounce on Friday as traders sought to cushion themselves against a potential uptick in trade tariff war rhetoric during the weekend. The yellow metal was popped up following threats by US President Donald Trump that he could impose a 200% tariff against alcoholic imports from the European Union.
Tariffs, Russia-Ukraine War Provide Gold Price Tailwinds
Trump’s move was in reaction to the EU’s 50% tariff on whiskey imports from the US, as a counter-tariff to 25% blanket tariff on steel and aluminium imports. The US President does not shy away from making substantial market-moving announcements during weekends, and investors are keen to cover their downside in case of any such announcements. This will likely provide tailwinds to XAUUSD heading into the weekend. Trump also raised tariffs on Chinese imports by at least 20% last week.
Beyond the tariff ecosystem, gold price is also supported by an escalation of hostilities between Russia and Ukraine. The two nations have began participating in a US-led ceasefire negotiations held in Saudi Arabia.
However, there has been a notable spike in drone and missile strikes going a notch higher this week. That has added geopolitical risk premium to gold price, and the momentum could overflow into next week and beyond. That said, yields on benchmark 10-year US treasury bonds inched up by more than 2 basis points, and that will likely limit gains by gold.
Gold Price Prediction
Gold price pivots at $2,979 and the upside will continue if action stays above that level. That momentum will likely meet the first hurdle at $3,000. However, an extended control by the buyers will break above that level and test the second resistance at $3,020.
Alternatively, the momentum could shift to the downside if XAUUSD breaks below $2,979. If that happens, gold price will likely find its first support at $2,960. The upside narrative will be invalid if the price breaks below that level. Furthermore, such momentum could extend the downside to test $2,945.
The post Gold Hits Milestone $3,000 As Tariffs And War Rhetoric Provide Perfect Storm appeared first in UK on InvestingCube.