HG MARKETS:

Gold’s price (XAU/USD) has successfully consolidated its gains from Tuesday and erased earlier losses during the Asian trading session on Wednesday. As of the latest update, gold is trading around $2,920. With tariffs still in place and more expected for Europe and other nations, gold continues to be a strong safe-haven asset. Investors remain focused on how global trade tensions and tariffs will unfold, which could significantly impact the demand for gold as a protective investment.

However, the market was taken by surprise with recent comments from U.S. Commerce Secretary Howard Lutnick, who suggested that tariffs could potentially be reduced or fully unwound for Mexico and Canada. This unexpected development has introduced some uncertainty for gold’s upward momentum. Earlier this week, U.S. President Donald Trump had increased tariffs on China and imposed a 25% levy on both Mexico and Canada. Lutnick’s comments, however, indicated that there could be room for some relief for the U.S.’s two neighbors, leading to speculation about the possible reduction of these tariffs.

In Zimbabwe, gold production saw a significant increase last month, with output rising to 2,568 kg from 1,854 kg in the same period last year, according to a statement from Fidelity Gold Refinery. Despite this increase in output, gold’s pricing has begun to stabilize, with extreme price dislocations fading. Bloomberg reports that tightness in the physical market is easing, signaling that the rush to ship bullion to the U.S. might have come to an end.

From a technical perspective, gold’s two-day strong recovery this week is facing potential pressure due to Lutnick’s remarks. The uncertainty surrounding the future of tariffs is causing traders to reassess their positions, potentially leading to a decrease in demand for gold. There’s a possibility that any changes in tariff policies could spark profit-taking, particularly for those who have bought gold as a safe-haven asset amid ongoing trade tensions. This could result in a temporary pullback in gold prices.

At present, gold is hovering near the $2,920 mark, with important technical levels to monitor. The daily Pivot Point at $2,909 and the daily R1 resistance at $2,936 are key points to watch on Wednesday. If gold continues to see more inflows, the daily R2 resistance at $2,955 could potentially cap any further gains, nearing the all-time high of $2,956 reached in February. On the downside, support at $2,890 is critical, as it coincides with Monday’s high. If this support level holds, it could prevent a deeper decline, with the next support at $2,863 offering additional protection against further downward pressure.