Gold extended its upward price trend on Wednesday, marking its fifth consecutive session of higher highs. Commodity analysts and bullion traders attribute this sustained rally to growing concerns over international trade dynamics, particularly following President Donald Trump’s recent tariff announcements.
The market remains firmly in bullish territory, but with prices moving away from the $2,790.17 support level, traders are advised to watch for potential near-term corrections. Analysts caution that while gold’s overall trend remains intact, the risk of a daily reversal is increasing as the rally continues.
Gold as a Hedge Against Geopolitical Instability
Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, highlighted gold’s role as a safe-haven asset during times of geopolitical uncertainty. “As international relations grow more chaotic, demand for gold rises, especially among central banks seeking to reduce exposure to U.S. policies,” she stated. Analysts now speculate that gold could easily target the $3,000 mark if current trends persist.
On Wednesday, the UAE’s gold price was reported at Dh337.35 per gram, up slightly from Dh335.89 the previous day. Looking ahead, 2,900isseenasthenextimmediatetarget, with 3,000 becoming a likely point of discussion. Despite recent fluctuations, buyers remain in control, and any significant pullback would need to breach the $2,800 threshold.
Potential Risks and Market Watch
Traders are advised to monitor upcoming U.S. economic data, particularly labour market indicators, as stronger-than-expected results could strengthen the U.S. dollar and weigh on gold prices. Barring unexpected geopolitical events, gold may experience a temporary pullback before resuming its broader uptrend. However, ongoing trade tensions and inflation fears continue to support gold’s appeal as a hedge, keeping the metal well-positioned for future gains.
Oil Markets: Limited Short-Term Impact from Tariffs
In contrast to gold, the oil and gas markets are expected to see only limited short-term effects from President Trump’s new tariffs on Canada, Mexico, and China. The tariffs, announced on Saturday, include a 25% levy on imports from Canada and Mexico and a 10% tariff on Chinese goods, effective February 4. Goldman Sachs has maintained its oil price forecasts for this year and next, citing stable global oil supply as a mitigating factor.
Regional Impact on Gasoline Prices
However, the bank warned that U.S. gasoline prices could experience a short-term spike, particularly in the Midwest, where refineries heavily rely on Canadian crude oil. “Canadian oil producers are likely to bear most of the tariff burden, resulting in a 3to4 per barrel discount on Canadian crude,” Goldman Sachs analysts noted. U.S. consumers of refined products might also face an additional 2to3 per barrel increase.
Broader Economic Concerns
Despite some initial upward movement in crude oil prices, concerns about the broader economic implications of a potential trade war are growing. Andy Lipow, President of Lipow Oil Associates, warned that retaliatory tariffs could trigger a global recession, leading to a medium-term decline in oil prices.
Immediate Outlook for Crude Oil
U.S. crude oil prices recently dipped below 71perbarrelbuthavesincerecoveredduetorenewedgeopoliticaltensionsinvolvingIran.Analystspredictthatcrudepriceswillhoverbetween73 and 75perbarrel,withthe70 psychological support level serving as a key focal point for traders.
Long-Term Projections for Oil Prices
Looking ahead, CareEdge analysts expect Brent crude prices to average between 75and80 per barrel over the next six months. This projection is driven by increased U.S. crude production, stable OPEC output, and steady Russian supply. However, a global economic slowdown and the shift toward electric vehicles and alternative fuels could limit significant increases in crude oil demand.
