Stong Safe-Haven Demand Supports Gold Price
The gold (XAU/USD) price remained relatively unchanged on Friday and continued to hover near all-time highs, driven by strong safe-haven demand.
XAU/USD rose by over 11% in 2025 as global economic and political uncertainties have intensified investors' appetite for gold, pushing prices to record highs above $2,950. Specifically, concerns over U.S. President Donald Trump's tariff plans have weighed heavily on market sentiment, sparking fears of a potential global trade war and a subsequent economic slowdown. These tariff concerns and persistent geopolitical tensions in key regions have created a climate of heightened risk aversion.
"Demand for gold is currently being driven primarily by western investors and central banks. ETF investors appear to be jumping on the bandwagon", Commerzbank analysts said in a note.
Trump's newly announced tariff plans, revealed this week, broaden the scope of existing duties to include lumber and forest products, adding to previously declared tariffs on imported cars, semiconductors, and pharmaceuticals.
"Gold's safe-haven role is not fully realised yet as the shift from riskier assets to safer ones is not significant, with money still on the sidelines", said Alex Ebkarian, chief operating officer at Allegiance Gold.
XAU/USD was rising during the Asian and early European trading sessions. Today's macroeconomic calendar is relatively uneventful, so the likelihood of big moves is relatively low. This week's main focus is on the U.S. publications: CB Consumer Confidence on Tuesday and Personal Consumption Expenditure (PCE) Price Index on Friday. Additionally, investors should monitor the Russia-Ukraine peace talks. Any progress there may be treated as a sign of reduced geopolitical risk, potentially dampening safe-haven demand for gold and leading to a temporary pullback.
Euro Starts to Recover After a Long Downtrend
The euro (EUR/USD) lost 0.4% against the US dollar (USD) on Friday as investors consolidated positions ahead of the weekend and monitored more tariff announcements.
EUR/USD has been recovering for the past month. After setting a multi-month low on 13 January, the pair has risen above the critical 1.04150 level and remains above the 25-day moving average. This recovery can be attributed to several factors, including a shift in market sentiment regarding the potential divergence in monetary policy between the Federal Reserve (Fed) and the European Central Bank (ECB). Indeed, the divergence in monetary policy expectations between the two central banks has been priced in well in advance. Furthermore, while still showing some signs of weakness, eurozone economic data wasn't as bleak as some analysts had feared. This contributed to a renewed confidence in the euro.
EUR/USD was rising strongly during the Asian and early European trading sessions. Today, the formal macroeconomic calendar is uneventful. However, several relatively minor eurozone macroeconomic reports may stoke some volatility in EUR pairs. Investors should follow the final Consumer Price Index data at 10:00 a.m. UTC and the German Bundesbank monthly report at 12:00 p.m. UTC. A break above 1.05264 would open the way towards 1.05474, while a drop below 1.05050 would enable bears to target 1.04910.
Canadian Dollar Weakens Due to US Dollar's Rebound
The Canadian dollar (USD/CAD) lost 0.32% against the U.S. dollar (USD) on Friday, primarily due to a technical rebound in the US Dollar Index (DXY).
"The greenback is undergoing a technical rebound after suffering a sustained sell-off in recent weeks, and other currencies are also seeing risk discounts come back as trade worries return", said Karl Schamotta, chief market strategist at Corpay in Toronto.
An additional factor contributing to CAD's recent weakness is the Bank of Canada's (BOC) stance on interest rates. On Friday, BOC gave a clear signal that it would cut interest rates to support the economy in case of a trade war with the U.S.
"Provided the inflationary impact of tariffs is not too big, monetary policy can help smooth the (economy's) adjustment by supporting demand so it doesn't weaken too much more than supply", said Tiff Macklem, BOC Governor.
"Governor Macklem is finally saying the quiet part out loud. After having been non-committal about the likely monetary policy response to U.S. tariffs, he's now being clearer that the central bank would likely cut rates more than it would have otherwise if a trade war erupts," said Royce Mendes, managing director and head of macro strategy at Desjardins.
According to Reuters, investors see a 43% chance of a March rate cut by the BoC, up from 33% before Macklem's speech.
USD/CAD fell during the Asian and early European trading sessions. Today's macroeconomic calendar is uneventful, so the likelihood of big moves in CAD pairs is relatively low. However, Statistics Canada will release its latest report on corporate profits at 1:30 p.m. UTC, which may lead to above-normal volatility. Key levels to watch are support at 1.41749 and resistance at 1.42052.