Gold prices (XAUUSD) remained steady around $2,700 on Monday, as market concerns arose ahead of Donald Trump’s inauguration as the 47th President of the United States. Traders are closely watching new policies that could impact the market, such as trade tariffs and immigration regulations, which may increase demand for gold as a safe-haven asset. In addition, ongoing geopolitical tensions and political uncertainty continue to provide strong support for prices.
GOLD
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On Monday, gold prices (XAUUSD) held stable around $2,700 after dipping during the previous Asian session. This movement was driven by trader anxieties surrounding Donald Trump’s upcoming inauguration. Trump’s planned policies, including trade tariffs and immigration rules, are significant concerns as they could have a substantial impact on the market. As a result, traders are adopting a cautious approach in their strategies for gold positions.
Meanwhile, political uncertainty and escalating geopolitical tensions continue to bolster gold prices. Gold remains an attractive option for investors amid ongoing instability. However, the potential strengthening of the US dollar due to Trump’s policies could limit further advances in gold prices. Currently, the market is attentively observing the developments in new policies and their effects on the gold market.
OIL
Oil prices experienced a continued decline during the European session, reaching $76.77 per barrel, marking a third straight session of decline. Oil traders are taking a cautious stance ahead of the inauguration of President-elect Donald Trump, occurring on the same day. Additionally, the market’s tension eased following the observation of Martin Luther King Jr. Day, which closed US markets.
Oil prices face potential selling pressure influenced by concerns regarding Trump’s policies, including tariff plans, tax cuts, and immigration deportations. Furthermore, recent tensions in the Middle East have lessened after hostage exchanges between Hamas and Israel.
EURUSD
The EURUSD currency pair strengthened during the European session, reaching 1.0318 on Monday. This increase came amid declining producer inflation in Germany, although the appeal of the safe-haven US dollar (USD) also diminished prior to Trump’s inauguration, thus benefiting the currency pair.
Investors are monitoring the Federal Reserve’s impending policies, which are anticipated to maintain interest rates at the upcoming May meeting. Concurrently, a cautionary statement from Stournaras, an ECB member, indicated that higher US tariffs could pressure inflation in the Eurozone below the central bank’s target, potentially adding further pressure on the EURUSD pair.
GBPUSD
GBPUSD traded sideways, briefly reaching a high of 1.2221 before dropping back to 1.2165 in the European session. This movement occurred amidst rising demand for UK government bonds and weaker-than-expected UK retail sales data for December. The pound’s increase is also linked to growing interest in riskier assets as investors adopt a more optimistic outlook ahead of Trump’s inauguration.
Market analysts predict that the Bank of England (BoE) could potentially lower interest rates by 100 basis points (bp) this year. Such a reduction may pressure the pound’s value, although demand for UK gilts and other riskier assets continues to provide some support for the currency. Tonight, GBPUSD remains positioned for volatility, trending toward strengthening.
USDJPY
The USDJPY currency pair traded quietly on Monday, oscillating between 156.583 and 155.707 during today’s trading session. Increased Machinery Orders in Japan for two consecutive months suggests a recovery in capital expenditure, while expectations of rising interest rates from the Bank of Japan (BoJ) offer slight support to the JPY.
However, selling pressure on the US dollar has contributed to the decline of USDJPY. Despite a generally positive market sentiment, uncertainty regarding Trump’s trade policy and anticipation for his inauguration speech, along with the BoJ’s policy meeting, limit the JPY’s potential for significant strengthening.
NASDAQ
The Nasdaq sustained its gains during the European trading session, remaining stable around 21,637. This increase was driven by slightly weaker inflation reports, with both core consumer and producer price indices showing lower-than-expected increases. A sharp decline in 10-year bond yields also reinforced expectations for more aggressive interest rate cuts this year.
Better-than-expected economic data has provided a positive boost to the market, encouraging investor optimism. This sentiment has revived interest in equities, with many investors shifting towards riskier assets amidst hopes for looser monetary policy and global economic stability.
