Gold still flirts with a minor loss after bigger drop on Monday

NEW YORK (January 27) Gold’s price (XAU/USD) slips below $2,770 at the time of writing on Monday after a very nervous headline-filled weekend. Meanwhile the week ahead is filled with quite a few central bank's rate decision . Over the weekend, markets understood why United States (US) President Donald Trump has eased on using tariffs as a tool.

It appears that tariffs will be used as leverage, for example, for countries that refuse to accept deported US immigrants who are being brought back to their country of origin. Columbia got a taste of the playbook on Sunday when President Trump ordered 25% emergency tariffs, and an increase to 50% in a week, as the country did not comply with President Trump’s deportation demands. However, the White House later confirmed that “Colombia has agreed to all of President Donald Trump’s terms, including unrestricted acceptance of all illegal aliens from Colombia returned from the US,” and Trump’s proposed tariffs were “now on hold.”

Later this week, the Federal Reserve (Fed) and the European Central Bank (ECB) will decide on policy rates on Wednesday and Thursday, respectively. Meanwhile a Chinese open source AI start up spooks markets and puts questions on the elevated valuations for tech stocks like Nvidia, dragging the Nasdaq lower. 

Daily digest market movers: Rates issues ahead

• Gold’s outlook remains positive on strong demand from central banks, with the precious metal’s reputation as an alternative reserve asset continuing to attract investors, according to Kotak Securities Ltd, Bloomberg reports. 
• Gold dipped, as the US Dollar (USD) rose after President Donald Trump held off from imposing threatened tariffs on Colombia as the two countries reached a deal on the return of deported migrants, Reuters reports. 
• The CME FedWatch tool projects no change in the policy rate for the upcoming Federal Reserve rate decision. Going forward, the May rate decision has a 43.8% probability of a 25 basis point rate cut compared to 45.4% for no change. 

FXStreet