Gold News: Softer Dollar and Trade Risks Could Fuel a Rally to Record Highs
NEW YORK (January 22) Gold prices are rallying sharply, nearing a three-month high, as traders assess a combination of a weaker dollar and policy uncertainty under U.S. President Trump. Spot gold has surged past $2,726.30, breaking a key resistance level set on December 12. With the record high of $2,790.17 within sight, traders are watching for further momentum.
This week’s price surge is also fueled by a softer U.S. Dollar Index , which sits near a two-week low. A weaker dollar tends to boost gold by making it more affordable for holders of other currencies. According to Ole Hansen, head of commodity strategy at Saxo Bank, “Uncertainty around Trump’s tariff announcements has driven both gold and silver higher as investors weigh their inflationary and monetary policy implications.”
Will Trump’s Tariffs Drive Gold Demand Higher?
President Trump’s tariff rhetoric has rattled markets, further supporting gold’s safe-haven appeal. His administration is considering tariffs of 10% on Chinese imports and 25% on goods from Mexico and Canada, citing concerns over trade imbalances and illicit fentanyl trafficking. These developments have added layers of uncertainty for markets, prompting increased demand for gold.
However, higher inflation from tariffs could lead the Federal Reserve to maintain higher interest rates, potentially curbing gold’s appeal as a non-yielding asset. For now, central bank purchases continue to provide strong support, with analysts at ANZ forecasting that rising investment demand will offset weaker physical demand.
Is the Dollar’s Weakness Here to Stay?
The U.S. dollar alternated between gains and losses on Wednesday as investors grappled with Trump’s tariff uncertainty. After falling 1.24% on Monday, the greenback is showing signs of fatigue, which has benefited gold prices. “The dollar is highly sensitive to Trump’s trade policies, and traders are hedging against potential tariff risks,” said Helen Given, FX trader at Monex USA.
Elsewhere, Treasury yields remain flat as markets digest Trump’s policies and await upcoming U.S. economic data, including jobless claims and housing reports. Trade-exposed currencies like the Canadian dollar and Mexican peso weakened, reflecting growing concerns over Trump’s trade stance.
Gold Prices Forecast: How High Can They Go?
Daily Gold (XAU/USD)
Gold has strong upward momentum, with the daily chart showing a clear path to test the record high of $2,790.17. However, traders should monitor key levels: a break below $2,726.30 could indicate a weakening trend, while a move under $2,693.40 would suggest a shift in momentum.
For now, uncertainty around Trump’s trade policies and continued dollar weakness suggest a cautiously bullish outlook for gold. Traders should remain attentive to news from Washington as it will likely dictate gold’s near-term moves.
FXEmpire
