Gold price rebounds to $2,800 after 1% dip as Trump tariffs fuel risk aversion
Gold inches closer to $2,800 as safe-haven demand surges amid Trump’s tariffs.
Gold prices are staging a compelling recovery, inching back toward the $2,800 per ounce level in the European session on Monday, February 3rd, after an initial 1% dip in the Asian session to $2,771.
This resurgence brings the precious metal close to the record high of $2,820 set on January 31st, following a 6.6% gain over the month.
The market dynamics for gold are being heavily influenced by recent geopolitical developments, particularly U.S. President Donald Trump's announcement of trade tariffs against Canada, Mexico, and China. The imposition of a 25% tariff on imports from Canada and Mexico, coupled with a 10% tariff on Chinese goods, has led investors to seek the safety of gold as a refuge from riskier assets, pushing more capital towards gold.
Technical indicators show mixed signals for gold price outlook
Gold price dynamics (November 2024-February 2025). Source: TradingView.
Technical indicators provide a nuanced view of gold's current trajectory. The daily Relative Strength Index (RSI) for gold is nearing overbought levels, suggesting that while there remains potential for further gains, the upside could be limited in the short term. However, the 4-hour RSI has moved from overbought to neutral and now back into bullish territory, indicating that the immediate price action might see some more upward momentum before any significant correction.
Moreover, the economic implications of Trump's protectionist policies are anticipated to drive inflation fears, enhancing gold's appeal as an inflation hedge. This scenario supports the notion that gold's path of the least resistance continues to be upward.
Investors are closely watching how these trade conflicts evolve, as any escalation could further boost gold's status as a safe-haven asset. Conversely, any signs of de-escalation or resolution might temper the bullish outlook. For now, with gold prices trading around $2,795 during the European session, the market sentiment leans towards cautious optimism.
Trade tariffs and a weaker dollar drove demand for gold, pushing its price to a record $2,800. The combination of these factors led to a surge in gold's value, surpassing its previous peak.
