Gold prices underwent unprecedented volatility

 

Donald Trump's proposed tariffs uncertainty remains yet! 

According to the weekly review, Dr. Renisha Chainani, Head- Research, Augmont said, gold prices plummeted more than 3% last week, while the dollar remained at two-week highs after US inflation data met expectations, implying the Federal Reserve may be hesitant about further rate reduction. Gold prices underwent a week of unprecedented volatility, establishing a new all-time high before falling sharply. The precious metal's eight-week winning streak came to an abrupt stop as the dollar strengthened and the mood shifted toward impending tariffs. 

Donald Trump's proposed tariffs uncertainty remains. President Donald Trump said that his proposed 25% tariffs on Mexican and Canadian goods will go into effect on March 4, coupled with an additional 10% charge on Chinese imports. He also threatened to levy 25% on EU goods. If Trump achieves an agreement with Canada and Mexico to postpone tariffs, the immediate market reaction could cause a USD selloff and help gold recover. Similarly, gold is expected to gain traction if Trump reconsiders raising duties on Chinese imports.

ETF and CFTC Holdings rising beyond short-term speculative swings, investor demand for gold is increasing. Last week, the WGC reported that 48 tons of gold worth $4.6 billion flowed into North America-listed gold-backed ETFs, the highest one-week increase since early April 2020.  

Since the start of the year, speculative bullish bets on gold futures have increased dramatically. The CFTC's disaggregated Commitments of Traders data show that gold's net long peaked at more than 200,000 contracts at the end of January, the largest level in over three years. Since then, momentum traders have slowly liquidated their long holdings, with selling pressure nearing critical levels.  

The week - Monday, March 3, starts with uncertainty! Friday's dispute between Ukraine President Volodymyr Zelensky and US President Donald Trump, as well as Europe's growing disagreements with the US over its Russia policy, will support safe-haven gold, as investors keep an eye on European efforts to develop a Ukrainian peace plan. The United States' economy is deteriorating significantly, and growth is expected to decline this quarter. This could push the Federal Reserve to relax its stance on rate cuts, benefiting gold. 

Gold April Futures are expected to recover this week on continued uncertainty with strong support at last week’s low of $2844(~Rs 84000) and 38.2% Fibonacci retracement of $2830 (~Rs 83500). On the upper side, prices need to sustain above 23.6% Fibonacci retracement of $2885 (~Rs 84900) to continue its uptrend to $2930(~Rs 85700) and higher.  

Silver has been trading in an uptrend for the last year, with prices taking support at the uptrend line. Now the support lies at $31 (~Rs 92000). On the upside, the resistance is $33 (~Rs 96000) and $34(~Rs 97500).







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