Gold Continues Rising on Newly Announced US Tariffs
The gold (XAU/USD) price rose by 0.74% yesterday. Safe-haven flows increased after US President Donald Trump announced reciprocal tariffs on over 120 countries, potentially starting a global trade war.
Yesterday, Trump said he would impose a 10% baseline tariff on most goods imported to the US and even higher levies on dozens of countries, including the biggest US trading partners and allies. Most economists argue that Trump’s actions significantly undermine the international trade system, potentially leading to higher inflation and slower economic growth. Among the most impactful tariffs are 34% on China, 20% on the European Union (EU), 24% on Japan, and 26% on India.
"The reciprocal tariffs are much more aggressive than expected, which should lead to asset market sell-offs and a lower US dollar. Gold’s prospects are excellent here, with $3,200 as the new short-term target. There are plenty of unanswered questions, and the sense that many things might be negotiable will make markets very volatile in the short term", said Tai Wong, an independent metals trader.
Gold is considered an asset that preserves its value during periods of political and financial uncertainty. XAU/USD has already risen by more than $500 so far in 2025 and continues to trade above all key moving averages.
"A breach of resistance at $3,147–3,149 would bode well for a push to $3,200 and lend confidence to bullish outlooks that highlight $3,300 and $3,500", said Peter Grant, vice president and senior metals strategist at Zaner Metals.
XAU/USD rose during the Asian and early European trading session, hitting a new all-time high above $3,160 per ounce. Today, the market will probably have to digest the world’s response to Trump tariffs. The retaliation from China and the EU will be particularly important. In addition, US macroeconomic reports may add extra volatility. Traders should focus on the Jobless Claims at 12:30 p.m. UTC and ISM Services Purchasing Managers’ Index (PMI) at 3:00 p.m. UTC.
"Spot gold may retrace into a range of $3,101 to $3,116 per ounce, as a five-wave cycle from $2,833 could be ending", said Reuters analyst Wang Tao.
Trade Tariffs Weakened US Dollar and Supported Euro
The euro (EUR/USD) rose by 0.57% against the US dollar (USD) on Wednesday. The greenback weakened after US President Donald Trump announced reciprocal tariffs, escalating a global trade war and stirring fears about economic recession.
An import tariff on the European Union (EU) of 20% will likely provoke retaliatory tariffs from the EU, escalating a conflict and impacting businesses on both sides of the Atlantic. Ursula von der Leyen, the President of the EU Commission, described the tariffs as a major blow to the world economy. She said the bloc was prepared to respond with countermeasures if talks with Washington fail.
"The consequences will be dire for millions of people around the globe", she said in a statement.
Meanwhile, concerns over a growing global trade war’s effect on the US economy and recent disappointing economic data have fueled recession anxieties and weakened the US dollar.
The Trump tariffs are "going to result in lots of tit-for-tat negotiations—what concessions can be made to get these down, whatever leverage the US exerts to get other countries to do something to get these tariff levels down, whether it’s defence considerations in Europe or Japan", said John Hardy, chief macro strategist at Saxo Bank in Copenhagen.
Traders should brace for a lot of volatility in the weeks ahead as countries engage in trade negotiations.
EUR/USD rose sharply during the Asian trading session and continued to move higher during the early European hours, potentially heading towards 1.10000. Major investors seem to flock to the safety of the Japanese yen and the Swiss franc, putting bearish pressure on the US dollar. Today, the market will focus on the countries’ response to the tariffs, with China’s and the EU’s reactions being particularly crucial. US economic data may also add to market volatility. Traders should monitor Jobless Claims data at 12:30 p.m. UTC and the ISM Services Purchasing Managers’s Index report at 3:00 p.m. UTC. For EUR/USD, key levels to watch are resistance at 1.10000 and support at 1.08800.
CAD Rises as Traders Worry About the Future of US Economy
The Canadian dollar (USD/CAD) gained 0.5% against the US dollar (USD) on Wednesday. The greenback weakened after US President Donald Trump announced tariffs on many countries, leading to an escalating trade war and increased fears about economic recession.
Trump has already imposed on many goods from Canada 25% tariffs, and the country won’t face additional levies from Wednesday’s announcement. Reuters reported that Mark Carney, Canadian Prime Minister, spoke with Mexican President Claudia Sheinbaum about Canada’s plan to ’fight unjustified trade actions’. As other countries, including Canada, retaliate and trade tensions escalate, the markets will increasingly shift to a risk-off mode. Investors will probably turn away from the US dollar as they fear that the trade war will hurt the US economy. As a result, the US Dollar Index (DXY) will suffer, and other major currencies will appreciate. USD/CAD has already dropped to a one-month low. More sellers may enter the market if the pair drops below the critical 1.41500 level.
USD/CAD fell during the Asian and early European trading sessions. Global reactions to Trump’s tariffs, especially from China and the EU, will dominate market attention today. Also, two US reports—US Jobless Claims at 12:30 p.m. UTC and ISM Services Purchasing Managers Index at 3:00 p.m. UTC—are expected to contribute to market volatility. USD/CAD traders should watch key levels for the pair: resistance at 1.42450 and support at 1.41800.