On Wednesday (January 22), during early Asian market trading, spot gold fluctuated at a high level, trading around $2,743.70 per ounce. On Tuesday, gold prices surged by 1.39%, reaching a two-month high of $2,745.83, closing at $2,744.59, supported by the weakening dollar and risk aversion triggered by Trump's tariff threats.
Weaker Dollar Boosts Gold Prices
The U.S. dollar index fell after a rebound was thwarted on Tuesday, hitting a two-week low of 107.86 and closing down 0.12%. A weaker dollar made gold more attractive to holders of other currencies, further pushing up gold prices. TD Securities commodity strategist Daniel Ghali noted that the strong performance of gold on Tuesday was mainly attributed to the threat of potential tariffs from Trump.
Trump's Tariff Threats Spark Market Concerns
Trump hinted at the possibility of imposing a 25% tariff on goods from Mexico and Canada as early as February 1. This announcement quickly reversed the global stock market rally and provided significant support to gold prices. Although Trump did not disclose detailed plans, the market reacted with high sensitivity. Monex USA foreign exchange trader Helen Given pointed out that Trump's proposed tariff policy remains in the suggestion phase but has already elicited a dramatic market response.
Canadian Prime Minister Trudeau stated that Canada is prepared to respond to potential tariff impacts. He emphasized the frequent and dynamic interactions with Trump, adding that Trump's negotiating style increases uncertainty.
Russia-Ukraine Situation and New Sanctions Plans
Furthermore, Trump mentioned that if Russian President Putin refuses to end the Ukraine war, the U.S. may impose a new round of sanctions on Russia. Although he did not reveal specific details, this news also supported gold prices as a safe-haven asset. Trump also mentioned exploring options to supply weapons to Ukraine and urged the EU to strengthen its support for Ukraine.
Market Outlook and Key Data
Market analysts believe that the potential impacts of Trump's policies include dual pressures on economic growth and inflation. The Federal Reserve is expected to maintain stable interest rates at next week's Federal Open Market Committee (FOMC) meeting, though the policy statement may hint at future directions. According to calculations by the London Stock Exchange Group, the market anticipates the Fed to cut interest rates by 38 basis points this year, with the June meeting possibly being a pivotal point.
Zaner Metals senior metals strategist Peter Grant advises investors to watch upcoming data such as the Personal Consumption Expenditures (PCE) price index. Although the Fed is unlikely to act this month, market sentiment and policy signals will still dominate gold price movements.
Key Focus
Today's key focus includes related developments from Trump, progress at the Davos Economic Forum, and comments from European Central Bank President Lagarde, all of which could further impact market sentiment and price trends.
