The price of Gold (XAUUSD) experienced a significant rise in trading on Tuesday, responding to the proposed import tariffs by the newly inaugurated U.S. President, Donald Trump.
Gold jumped by $38.25 or 382.5 pips, reaching $2,744.59 per troy ounce, marking the highest level since November 6, 2024. This daily increase represents the sharpest rise in January and in the past two months. Moreover, the price of Gold is now approaching its all-time high of $2,790, achieved on October 31.
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Following his inauguration as the 47th President of the United States on Monday, Trump announced plans to potentially raise import tariffs by 25% on goods from Canada and Mexico starting February 1. This move has raised concerns about a trade war with Canada, as Canadian Prime Minister Justin Trudeau has indicated a response would be forthcoming if Trump moves forward with the tariff increase.
In addition to this, Trump announced an additional 10% tariff on imported goods from China, further boosting Gold’s appeal as a safe haven asset, contributing to its rising price.
Interestingly, both EURUSD and GBPUSD, which had previously been under pressure, saw a rebound. Typically, an increase in import tariffs brings the potential for rising inflation in the United States, which could cause the Federal Reserve to take a more cautious approach to interest rate cuts. Such a scenario would generally strengthen the U.S. dollar, leading to a possible decline in EURUSD and GBPUSD once again.
