How to trade Gold ahead of Trump's reciprocal tariff announcement today?

Gold: A fresh record high before closing lower as reciprocal tariffs loom

 

Performance   Spot gold, buoyed by safe haven demand, as intensifying trade wars raise concern over the global economy, rose to a fresh record high of $3149 on April 1, the first trading day of Q2 2025, before closing 0.20 per cent lower at $3114 as traders remain jittery ahead of the US reciprocal tariff announcements scheduled for 4PM Eastern Time, Wednesday.

 

Gold rallied 19 per cent in the first quarter as it was up around 2 per cent last week—its fourth straight weekly gain.

 

Data roundup

 

US data released on Tuesday were largely disappointing as JOLTs job openings fell from 7762K in January to 7568K in February (forecast 7658K). ISM manufacturing (March) came in at 49 (estimate 49.50), the first contraction this year whereas prices paid jumped to from 62.40 to 69.40, hottest reading since June 2022 as new orders and employment contracted more than expected. US data continue to portray a rising probability of stagflation. 

 

HCOB Eurozone manufacturing PMI (March final) at 48.60 was a tad lower than the median estimate of 48.7. Eurozone's CPI rose was up 0.6 per cent m-o-m that matched the estimate whereas core CPI rose 2.4 per cent y-o-y as against the forecast of 2.5 per cent. Eurozone's unemployment rate fell from 6.2 per cent in January to 6.1 per cent in February. China's Caixin manufacturing PMI at 51.20, highest since November, topped the estimate of 50.60 and showed an improvement over the prior data of 50.80. S&P Global UK manufacturing PMI (March final) came in at 44.90 (estimate 44.60), whereas Jibun Bank Japan manufacturing PMI (March final) was noted at 48.40, a slight improvement over the prior data of 48.30.

 

Upcoming data

 

Today's major data include US ADP employment change (March), factory orders (February) and durable goods orders (February final).

 

US Dollar and yields

 

US 10-year yields fell to 4.1309, lowest since March 4, before settling 1.16 per cent down at 4.16 per cent. Two-year US yields at 3.875 per cent were down 0.29 per cent on the day.

 

The US Dollar Index closed with a gain of 0.02 per cent at 104.23.  Also Read: Silver trading strategy: Check Support, Resistance, other key levels here

 

Upcoming event

 

The US Fed Chair Powell will speak on economic outlook at the Society for Advancing Business Editing and Writing (SABEW) Annual Conference on April 4.

 

ETF

 

Total known global gold ETF holdings surged to a fresh cycle high of 87.921MOz, which is the highest level since September 2023. ETF holdings are up around 6 per cent YTD, which continues to support gold prices.

 

ETF holdings saw net inflows of around 152 tons in Q1 2025.

 

COMEX Gold inventory

 

COMEX gold inventory at 43.80MOz remains at a record high level on delivery demand.

 

Central Bank action

 

The People’s Bank of China reported it had added 16 Kilo Oz of gold to its reserves in February.

 

Outlook

 

China allowing 10 insurance firms to invest up to 1 per cent of their assets in gold is quite positive for gold as this program will potentially free up 200 billion yuan of funds. ETF inflows, economic concerns and uncertainties, US data pointing to a possibility of stagflation and geopolitical concerns are supportive for the metal. However, tariff uncertainty may lead to a pullback on Wednesday, overall, outlook remains constructive though. The yellow metal is likely to reach $3200 (Rs 93,000) in the coming weeks. Interim resistance is at Rs 92,000.

 

Support is at $3100 (MCX Gold June contract Rs 90,400)/$3050 (Rs 89,000).

 

-- MCX gold price at USDINR rate of Rs 85.58

 

(Disclaimer: Praveen Singh is an associate VP of fundamental currencies and commodities at Mirae Asset Sharekhan. Views expressed are his own.)