Gold Gains Against Ongoing Tariff Uncertainty

The pause in implementing the planned tariff measures gives breathing room for negotiations to take place behind the scenes between the US and other countries, meaning that we are not yet sure where the final tariff levels will land. For now, the net effect is that financial markets are being left in a state of ‘tariff limbo’, which adds an element of uncertainty to the trading environment. An undesired element as that may be.

Amid this economic backdrop, gold is acting as the de facto ‘tariff uncertainty’ hedge. Gold is back within touching distance of its all-time highs, with the spot price trading at $2935 early in the Asian trading session on Wednesday. $2955 is shaping as the next resistance level to watch, while support arrives at $2884. The bullish outlook for the precious metal remains intact, particularly whilst the global trade picture remains uncertain. However, any resumption of the uptrend in the USD could slow gold’s progress.

The Dollar Index (DXY) has moved off the 2-month lows, though tariff delays and softer US retail sales data for January have weighed on the greenback. The DXY started Wednesday’s session at around the 107 level, with resistance awaiting at 107.46 and 107.86, with support at 106.62. Growth and yield-differential dynamics look to be in favour of the USD versus the British Pound and euro, however it could be a different story when it comes to the yen.

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Japanese GDP figures this week were on the higher side of expectations, while inflation readings have also been elevated. As things stand, expectations that we could see the US-Japan yield differential continue to shrink in 2025 may hold the yen in comparatively good stead against its US counterpart.

Russian oil pipeline disruptions saw the price of crude edging higher, however the onset of US-Russian discussions and a potential path towards an end to the war in Ukraine could act as a limiting factor on near-term upside. US (WTI) crude was trading around the $71.75 level (Wednesday morning), with resistance at $72.15 protecting the next leg higher at $73.38. Support awaits at $70.50.

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Asian tech stocks have been rejuvenated in 2025, courtesy of DeepSeek’s developments and a shift in tone from Beijing towards the private sector (with Chinese President Xi Jinping speaking at a symposium for private sector entrepreneurs this week). The outperformance of Asian tech stocks illustrates that investors are viewing the area as a viable alternative to Silicon Valley when it comes to the global AI race which is well and truly underway.