Gold breaks to fresh two-month high with tariff concerns fueling more upside for precious metals

LONDON (January 21) Gold’s price (XAU/USD) trades positive for a second straight day this week after a volatile ride where US President Donald Trump confirmed he intends to impose 25% tariffs on Canada and Mexico as early as February, as well as tariffs on Silver and Gold. China was left out of the immediate levies being imposed, Bloomberg reported. 

The possibility of Trump applying tariffs on Silver and Gold has caused market uncertainty, driving premiums for futures to elevated levels.  President Trump's domestic agenda is the second main driver, which could extend Gold’s bullish momentum further and increase demand for haven assets. Meanwhile, bond yields took a nosedive to 4.527% in Asian trading on Tuesday after remaining closed on Monday for Martin Luther King Day. 

Daily digest market movers: Back to 2017

• Comments by President Donald Trump during the signing session of his first executive orders caught traders by surprise. During the session, Trump said tariffs for Canada and Mexico will already be implemented as soon as February. The market reaction was a knee-jerk fall in the Canadian Dollar (CAD) and Mexican Peso (MXN) due to the unexpected decision, as the Wall Street Journal had already published a story on Monday where tariffs were postponed until a task force was formed first, Bloomberg reports.
• President Trump confirmed that universal tariffs on all imports to the US are under consideration as well and will come at a later stage, Reuters reports.
• Saudi Arabia’s investment mining fund is set to buy a stake in Pakistan’s Reko Diq project, which will be one of the world’s largest Copper mines once complete, as the kingdom accelerates its expansion into the precious metal sector, the Financial Times reports.
• US yields are catching up with Monday’s turn of events after remaining closed on that same day due to Martin Luther King Day. The US 10-year benchmark sank to 4.527% before rebounding at the start of the European session. The 10-year bond is still trading 5% lower from its peak performance last week at 4.788%  

FXStreet