Potential impact of Trump's tariff policies on Gold market dynamics

Volatility in precious metals before inauguration

Markets, particularly gold, often experience volatility in the lead-up to significant political events like presidential inaugurations.

Traders could be uncertain about Trump's policies, especially in terms of trade and tariffs, which historically impact the value of the US dollar and precious metals like gold and Silver.

Trump denies imposing less strict tariffs

If Trump has denied any plans to relax tariffs, this might suggest that trade tensions could continue, which could create a bearish environment for risk assets but supportive for safe-haven assets like gold. However, the lack of immediate action could also temper some of the earlier fear-driven buying, making gold less attractive.

Profit booking after US data release

If you are expecting significant US economic data to be released soon; it could serve as a trigger for traders to book profits.

Expectations of today’s strong ISM Services PMI data could signal economic recovery, dampening golds safe-haven appeal, leading to potential selling by those who were long on gold.

Trend change in Gold

If many traders who are currently holding long (buy) positions in gold start to exit, this could cause a shift in the market sentiment, leading to a potential trend reversal in gold prices. If profit-taking becomes widespread, the price of gold could decline, marking a change in its recent trend.

Trading strategies for Gold spot (XAU/USD)

Gold spot (XAU/USD)

As of the morning session in the US, the spot price of Gold (XAUUSD) peaked at around $2664.26 per ounce. This price point could represent a strong opportunity to sell Gold, as it aligns with typical profit-taking behavior. Traders may look to secure gains at this level, leading to potential market corrections.

If the price of gold declines, it could test today's low of $2633.07 per ounce. A break below this support level may signal a move toward the 100-day moving average at $2626.34 per ounce, which would act as a key support zone. If the price continues to drop, it may approach the low from January 6th at $2514.60 per ounce. A break below this level could lead to a further decline, potentially reaching the December 30th low of $2595.80 per ounce.

Holding period this week

Given the current market conditions, the holding period for gold this week could depend on the evolution of economic data and geopolitical events. Traders may consider shorter-term positions, particularly in light of potential price fluctuations and profit-taking activity. Monitoring key support and resistance levels will be crucial to managing positions effectively.