The price of XAU/USD (gold) raced past the key level $1,300 on Friday to end the US session at around $1,306 after the news that Trump was planning to wage another trade war with America’s immediate neighbors to the South, Mexico.
The price of the yellow metal has been under intense pressure in recent trading session with the greenback and the US economy boasting strength as the earnings season exits the climax period.
However, following President Trump’s latest tweets, the atmosphere appears to be changing and now investors are once again rushing their investments to safe havens like gold.
XAU/USD (Gold) Fundamentals Overview
From a fundamental perspective, the price of the yellow metal appears to be benefiting from the negative market atmosphere created by Trump’s latest tweets.
This was evident after the US 10-Year Treasury Yield plunged to a 20-month low of 2.16% on Friday morning after the US president said the country will levy 5% tariffs on all Mexican products entering US soil. This was interpreted by the market as a potential recession trigger that could send the global financial markets to a crisis.
Starting a trade war with Mexico with the Chinese battle still hot could affect the US economy and this is why traders are running to safe havens. However, investors will be keen on next week’s Jobs data to see what the immediate future holds.
XAU/USD (Gold) Technical Analysis (the 60-min Chart)
The price of gold appears to have made a major rebound today after bouncing off the current trendline support. And now, it is nearing the upper level of what appears to be the formation of an ascending channel. The trendline resistance is not far off and this could trigger a pullback soon.
The bulls will target profits at around the $1,310 level while the bear will hope for a major pullback towards the $1,300 key level.
XAU/USD (Gold) Technical Analysis (the Daily Chart)
In the daily chart, the pair appears to be forming a potential consolidative pattern with a flat base and a descending top. But on a bigger scale, the pair could be forming a potential triangle breakout pattern ahead of next week’s economic data.
In summary, while today’s Trump bombshell might have given the price of gold a lifeline against the greenback, next week will be interesting especially if things about tariffs cool off a bit.