05 Feb 2025

• Gold price continues to attract safe-haven flows amid renewed US-China trade war fears.
• Fed rate cut bets undermine the USD and further lend support to the XAU/USD pair.
• A slightly overbought RSI on the daily chart warrants some caution for bullish traders.
• Gold prices (XAU/USD) are experiencing an upward trajectory during the Asian trading session on Wednesday, reaching a new all-time high near the $2,858 mark in the most recent hour. Ongoing apprehensions regarding the economic repercussions of US President Donald Trump's trade tariffs are sustaining demand for this safe-haven asset. Additionally, the anticipation that the Federal Reserve (Fed) will continue its accommodative monetary policy, supported by indications of a deceleration in the US labor market, is further encouraging investment in the non-yielding yellow metal.

• Gold price bulls retain control amid US-China trade tensions, despite positive risk tone

• The US Dollar (USD) is currently hovering near its weekly low, influenced by the potential for further policy easing from the Federal Reserve, which serves as an additional support factor for Gold prices. Furthermore, former President Trump's decision to postpone tariffs on Canada and Mexico contributes to a risk-on sentiment, potentially limiting the gains for XAU/USD, especially given the slightly overbought conditions observed on the daily chart. Consequently, it may be wise to await a short-term consolidation or a slight pullback before making any moves to capitalize on the recent upward trend. Traders are now anticipating the release of the US ADP report on private-sector employment and the US ISM Services PMI for further direction.
• China responded to the new tariffs imposed by US President Donald Trump by implementing targeted tariffs on American imports, heightening concerns of a trade war between the two largest economies in the world. This development contributed to a surge in the price of safe-haven gold, reaching a new record high on Wednesday.
  
  The Job Openings and Labor Turnover Survey (JOLTS) released by the US Bureau of Labor Statistics on Tuesday indicated that the number of job openings at the end of December was 7.6 million, a decrease from the previous figure of 8.09 million.
  
  This data suggests a deceleration in the job market, which may provide the Federal Reserve with the impetus to further reduce interest rates. Consequently, this situation places US Dollar bulls in a vulnerable position near the weekly low, simultaneously benefiting the XAU/USD pair.
  
  In a bid to ease tensions, Trump extended a 30-day delay on the 25% trade tariffs for Canada and Mexico, raising hopes of averting a global trade war. However, this action has had minimal impact on the prevailing bullish sentiment surrounding the safe-haven precious metal.
  
  On Wednesday, the US economic calendar includes the release of the ADP report on private-sector employment and the ISM Services PMI, which are expected to influence the USD and create short-term trading opportunities in the commodity market.
  
  Nevertheless, the primary focus will remain on the highly anticipated US monthly employment report, commonly referred to as the Nonfarm Payrolls (NFP) report, scheduled for release on Friday. Additionally, developments regarding tariffs are likely to introduce volatility into the markets.

• Gold price needs to consolidate its recent gains amid overbought conditions on the daily chart

• From a technical perspective, the Relative Strength Index (RSI) on hourly and daily charts is flashing slightly overbought conditions, warranting some caution for bullish traders. That said, the recent breakout momentum beyond the $2,800 mark suggests that the path of least resistance for the Gold price remains to the upside. This, in turn, supports prospects for an extension of the recent well-established uptrend from the December 2024 swing low. 

  In the meantime, any corrective slide now seems to find some support near the $2,830 area ahead of the $2,800 mark. A further decline could be seen as a buying opportunity and is more likely to remain limited near the $2,773-2,772 horizontal resistance breakpoint, now turned support. A convincing break below the latter, however, might prompt some technical selling and pave the way for deeper losses.