Gold prices took a breather on Tuesday after hitting a new lifetime high in the previous session, as tariff discussions between the US, Mexico and Canada gained momentum, easing the concerns surrounding the potential trade war.
Gold prices dipped on Tuesday, however holding near record levels, after US President Donald Trump agreed to “pause” the tariffs on Mexican, Canadian and Chinese goods
Gold prices took a breather on Tuesday after hitting a new lifetime high in the previous session, as tariff discussions between the US, Mexico and Canada gained momentum, easing the concerns surrounding the potential trade war.
Spot Gold on MCX quoted at Rs 82,740 per 10 grams, as at 4:30 PM on February 4. Gold April Futures traded at Rs 83,006 per 10 grams, as of 4:50 PM, after opening at Rs 83,283. Spot gold in the US gained 0.1% to $2,809.91 per ounce as of 2:57 PM after hitting a record high of $2,830.49 on Monday.
Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities explains, “Gold’s positive rally took a slight pause as MCX gold traded near Rs 83,000 with a minor Rs 200 dip. This weakness came as tariff discussions between the US, Canada, and Mexico gained traction.”
United States President Donald Trump on Saturday announced imposing tariffs on Canada, Mexico and China. Trump had imposed a 25 per cent tariff on goods imported from Canada and Mexico and a 10 per cent from China. This was the very reason why gold prices shot up in the previous session.
In response, Canada also imposed 25% tariffs on US goods as a countermeasure. On the other hand, Mexico said that it would retaliate against tariffs, while China vowed to take "corresponding countermeasures to safeguard our own rights and interests resolutely".
However, on Monday, Trump, after holding talks with his Mexican counterpart, Claudia Sheinbaum, agreed to "pause" the tariffs on Mexican goods for a month.
Speaking about Trump’s tariff reversal, VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, says, "The decision taken by Trump to temporarily freeze the tariffs on Mexico and Canada and start negotiations is a clear indication of President Trump’s strategy: That is, impose tariffs and then negotiate and strike a deal. The same strategy is likely to be tried with China, too. It is important to understand that a full-blown trade war will be damaging for the US, too."
Going forward, Jateen Trivedi of LKP Securities, says, “Gold is expected to trade in a range between Rs 82,000 and Rs 83,500."
Anuj Gupta, Head of Commodity & Currency at HDFC Securities says, “The safe-haven demand for gold is still intact as ease in trade war fear is temporary. MCX's gold rate is currently in Rs 82,200 to Rs 84,000 range. Any dip around the lower range should be seen as a buying opportunity.”