- Gold falls flat on the day after earlier losses in the Asian trading session.
- US Commerce Secretary Howard Lutnick hinted at some relief on the recent tariffs.
- US yields finally recover a touch, though they still have a long road to recovery.
Gold’s price (XAU/USD) consolidates Tuesdays gains and erases its earlier losses in the Asian trading session and trades around $2,920 at the time of writing on Wednesday. With tariffs still in place and several more tariffs to come for Europe and other countries, Gold will remain the place to be in terms of safe haven.
However, some surprising comments from United States (US) Commerce Secretary Howard Lutnick overnight hinted that tariffs could already be eased or fully unwinded for Mexico and Canada. This pressures the upside for Gold for now.
Daily digest market movers: Quick solution
- US President Donald Trump doubled tariffs on China and imposed 25% levies against Canada and Mexico earlier this week. However, US Commerce Secretary Howard Lutnick hinted at some relief for the US’s two neighbors, telling Fox Business there could be a path to reduce some of the duties, Bloomberg reports.
- Zimbabwe’s Gold output jumped to 2,568 kg last month from 1,854 kg in the year-earlier period, Fidelity Gold Refinery says in an emailed statement, Reuters reports.
- Gold’s extreme price dislocations are fading as tightness in the physical market eases, indicating a rush to ship bullion to America may have run its course, Bloomberg reports.
Technical Analysis: Lutnick comments are taking sting out
Bullion might face some pressure on Wednesday after its two-day strong recovery this week. The comments from Secretary Lutnick are putting longer-term safe haven flow for Gold a bit on loose screws. Traders will want to trim their positions in the idea that the US could, at any moment, unwind those tariffs, which would spark profit-taking in the precious metal.
While Gold trades near $2,920 at the time of writing, the daily Pivot Point at $2,909 and the daily R1 resistance at $2,936 are the levels to watch for this Wednesday, with the daily Pivot Point already back in the hands of the bulls. In case Gold sees more inflows, the daily R2 resistance at $2,955 will possibly be the final cap ahead of the all-time high of $2,956 reached on February 24.
On the downside, the S1 support at $2,890 converges with Monday’s high. That will be the vital support for this Wednesday. If Bullion bulls want to avoid another leg lower, that level must hold. Further down, the daily S2 support at $2,863 should be able to catch any additional downside pressure.
XAU/USD: Daily Chart
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
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