Gold Higher as USD Falls

Gold prices traded up to their highest level since November today on the back of Trump-driven volatility yesterday as the president returned to office. The US Dollar was seen sharply lower, initially, yesterday before rebounding later in the day. Trump actioned a slew of executive orders, as promised, but the absence of the more aggressive trade tariff actions which he’d previously threatened to sign on day one, saw USD weakening over the day allowing gold room to push higher.

Volatility Risks Continue

Later on yesterday, Trump announced that he plans to action 25% levies on Canada and Mexico by Feb 1st. This statement gave USD a boost and is seeing further buying today which could halt the rally in gold if it starts to gain stronger momentum. However, uncertainty around Trump’s return to office and the prospect of further market volatility means that gold is likely to retain a string safe-haven bid. In particular, traders worry about the impact Trump’s return to office will have on global geopolitical events. Trump’s notorious flare for confrontation and aggressive rhetoric means that headline risk is likely to be a big factor in the coming days and weeks as we hear more from the president and more initial policy actions are taken.

Technical Views

Gold

The rally in gold has seen the market breaking out above the bear channel highs, though the move has stalled for now into the 2,718.88 level. With momentum studies bullish, focus is on a break higher and move back up to the 2,789.40 level. To the downside, 2,604.56 remains the key support to watch.