Can Trump’s trade war threats buy a safe haven?
Market’s attention is intensified after the proposed Trump rates – 25% on Canadian and Mexican input and 10% on Chinese goods from 1 February. The president also indicated potential European rates, although details remain unclear. These protectionist signals reinforce the traditional role of Gold as a cover against economic uncertainty. The proposed trade barriers have already caused the increased demand for safe haven, whereby institutional investors are reportedly stimulating their gold positions.
Is the FED ready to turn on interest rates?
The meeting of January 28-29 of the Federal Reserve approaches with markets prices in a probability of 96% that the rates remain unchanged, according to the Fedwatch tool of CME. The recent comments from the Governor Waller suggest that multiple rate reductions can occur if inflation continues to fall. As an addition to the market focus, both the Bank of Japan and ECB have planned critical policy decisions. The convergence of these central banking meetings has created increased volatility expectations on markets for precious metals.
How do important economic data influence the market markets?
Treasury proceeds remained stable while investors are waiting the World Economic Forum address and crucial economic indicators of Trump. Markets are closely monitoring the upcoming initial unemployed claims, S&P Global Composite PMI Flash and December existing house sales figures for direction on economic health and monetary policy implications. These data points can significantly influence trading patterns in both treasury and gold markets.
Market forecast
Gold seems to be positioned to test the $ 3,000 if Trump’s trade policy escalates worldwide economic problems. However, technical indicators suggest that a short -term correction can precede. The performance of the metal will probably depend on the FED meeting next week and the implementation data of the proposed rates. Traders must follow the RSI on possible Overbought signals while retaining the focus on decisions of the central bank, in particular because several policy meetings coincide with escalating trade stresses.
More information in our economic calendar.