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Gold drops slightly as tariff reprieve softens initial shock

Gold drops slightly as tariff reprieve softens initial shock
Youssef Eid

February 4, 2025

Gold dropped slightly this morning after hitting a new all-time high at $2830 during yesterday’s trading supported by some indicators. The RSI, where the price moves above the 50 level on the 4-hour chart. Additionally, the Bollinger Bands, where the price is above the middle line of the indicator. However, the markets are waiting for more positive momentum with the closing of a 4-hour candlestick above the upper line of the indicator.

Currently, gold is eyeing a rebound after hitting a new historic peak at $2830 during yesterday’s trading. Meanwhile, gold is trading above the daily pivot point at $2805, breaking through the upper line of the bullish channel. Noting that, stability above this point could push gold towards new historic highs towards $2840, then $2864.

On the downside, if gold breaches the lower line of the ascending channel and settles beneath it, gold may begin a corrective downward wave toward $2747. This level could be noted as an important pivot point. A sustained move below it could signal further downside on the medium term.

On the other hand, investors are waiting for key economic data later this week, particularly related to the services and industrial sectors in major economies. If the data exceeds expectations, it could negatively impact gold prices and lead investors to move away from investing in gold. On the flip side, improvement in these sectors could have a positive effect on their economic activities.

President Trump announced on Saturday that he would impose a 25% tariff on Canada and Mexico and a 10% on China. This announcement led to a roughly 1% rise in the dollar index. Also, gold saw a notable increase, hitting $2830.

Despite that, gold opened today’s trading with a slight decline after Trump announced that the tariff on Canada and Mexico would be delayed for a month.

This week’s calendar includes key data for markets to await: the U.S. non-farm payrolls, job openings, and unemployment claims data. Attention will mainly be on the non-farm payrolls, with expectations for a drop to 154,000 jobs, down from 256,000. If the data beats expectations, the dollar could gain support, putting pressure on gold. However, a slowdown in job growth could boost gold’s appeal as a safe haven, pushing its prices higher.