Gold and Copper Prices Surge Amid Trump’s Reciprocal Tariff Plans
Gold and Copper : Global financial markets remain on edge as escalating trade tensions between the United States and China continue to drive uncertainty. In the latest development, President Donald Trump announced reciprocal tariffs, set to take effect next week, further fueling concerns about economic instability. Amid this turmoil, gold and copper prices have surged, with investors seeking safe-haven assets and anticipating supply chain disruptions.
Gold’s Meteoric Rise to Record Highs
Gold prices have continued their upward momentum, marking their sixth consecutive weekly gain. Comex gold surged nearly 2% this week, reaching an all-time high of $2,910.6 per ounce. Investors flocked to gold as a hedge against economic uncertainty, driven by fears of escalating trade wars and geopolitical instability.
China’s central bank has been aggressively expanding its gold reserves, increasing holdings for the third consecutive month in January. This move has further strengthened gold’s rally, as demand from the world’s second-largest economy continues to rise. Additionally, speculation that President Trump may impose tariffs on gold imports has created an imbalance between Comex gold and London spot prices, further fueling the rally.
In India, MCX Gold April futures also reached record highs, closing at ₹85,279 per 10 grams. This marks the seventh consecutive week of gains, with a 3.1% jump—the highest weekly increase in two months. Analysts expect gold prices to continue climbing in the coming week, with initial resistance at ₹85,500, followed by ₹87,000. However, the Relative Strength Index (RSI) stands above 70, indicating an overbought zone, which may lead to a short-term correction if prices fail to sustain above the ₹85,500 level. In such a case, support levels at ₹83,000 and ₹81,800 could come into play.
Copper Prices Surge Amid Tariff Uncertainty
Copper, often considered an economic barometer, has also seen significant gains amid fears of supply chain disruptions due to tariffs. LME copper prices surged to a three-month high, driven by optimism surrounding a potential demand recovery in China post-Lunar New Year.
The imposition of tariffs on key trading partners has raised concerns about supply constraints, particularly for base metals like copper, which are essential for various industries. With China being a major consumer of copper, any restrictions on trade could lead to increased volatility in prices. Traders and investors are closely monitoring developments as they brace for further tariff-related announcements from the Trump administration.
US Dollar and Crude Oil Market Reaction
The US dollar initially surged to 109.88 earlier in the week, buoyed by tariff announcements. However, a sharp retreat followed after the US delayed a 25% tariff on Mexico and Canada by one month. The greenback’s weakness contributed to a second consecutive weekly loss for major US stock indices.
Meanwhile, WTI crude oil prices continued their downward trend, closing 2% lower at $70.4 per barrel. This marks the third consecutive weekly decline, primarily driven by President Trump’s renewed push for increased US oil production. Additionally, a sharp rise in US oil inventories and concerns over the trade war’s impact on global crude demand have put further pressure on oil prices.
However, earlier in the week, crude prices briefly surged above $75 per barrel following Trump’s 10% tariff on Canadian energy imports. Saudi Aramco’s decision to raise crude oil prices for Asian customers in March also provided some support to the market, helping prices stay above the $71 per barrel mark.
Market Outlook: What’s Next?
Looking ahead, financial markets are expected to remain volatile as investors assess the impact of China’s retaliatory tariffs on a range of US products, set to take effect on February 10. Market participants will also be closely watching key economic data, including:
- US Consumer Price Index (CPI): A crucial indicator for inflation trends
- US Retail Sales Data: A measure of consumer spending strength
- Federal Reserve Chair Jerome Powell’s Testimony: Insights into future monetary policy decisions
With inflation expectations on the rise and a strong US labor market, the Federal Reserve is likely to maintain a cautious stance. While some analysts had predicted potential rate cuts, the latest developments suggest the Fed may hold interest rates steady at least until June.
Final Thoughts
As the US-China trade war intensifies, gold and copper are expected to remain elevated due to their safe-haven appeal and industrial demand, respectively. Investors should remain vigilant, as any further tariff-related announcements from the Trump administration could trigger additional market volatility.
For traders and investors, gold remains a key asset for risk management, while copper’s price movements will provide insights into global economic trends. With uncertainties still looming, market participants should keep a close watch on trade negotiations, inflation data, and Federal Reserve policy decisions in the coming weeks.
Key Financial Ratios and Market Data:
Gold:
- Comex Gold Price: $2,910.6 per ounce (+2%)
- MCX Gold April Futures: ₹85,279 per 10 grams (+3.1%)
- Support Levels: ₹83,000, ₹81,800
- Resistance Levels: ₹85,500, ₹87,000
- RSI (14): Above 70 (Overbought)
Copper:
- LME Copper Price: 3-month high (+%)
Crude Oil:
- WTI Crude Price: $70.4 per barrel (-2%)
- Key Resistance: $75 per barrel
- Saudi Aramco Price Adjustment: Increased prices for Asian buyers
US Dollar & Stock Market:
- US Dollar Index: Peaked at 109.88 before retreating
- Major Stock Indices: Second consecutive weekly loss
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.