XAU/USD: Gold Blasts Off to Record Above $2,940 but Traders Fink Out and Rally Sputters

Enthusiastic buying catapulted prices to sky-high levels but some of those paper hands were afraid of heights. Gold lost some $30 early Tuesday.

🚀 Gold Blasts Off to Record High

• Gold prices XAUUSD took off Tuesday morning but then reversed course quickly as antsy traders reacted to Donald Trump’s aggressive move on tariffs. The precious metal soared all the way to $2,941 per ounce during the Asian session — a fresh all-time record.
• The upside swing was more of a spike — soon after the record session high, prices retreated as paper-handed gold traders sold off their positions, leading to a $30 drop to $2,910.

⚔️ Trump and His Game of Tariffs

• Trump on Monday imposed a 25% tariff on all imports of steel and aluminum and vowed to continue with the punishing measures still this week. Could tariffs on gold imports be next? That’s what traders and investors fear and that’s partially why the shiny stuff is ripping.
• Tariffs on gold will lead to complicated trading of physical gold across the Atlantic. Over the past few weeks, gold dealers have been rushing to import more of the bullion in efforts to avoid potential tariffs.

🧐 What Are Tariffs and What Do They Do?

• Tariffs are essentially an added tax on imports but they apply to the party receiving the goods. In other words, it’s the US side which should cover the tax and the paid charge goes to the US administration, helping pay off its debts.
• What’s more, tariffs carry the potential to flare up inflation again after yearslong battle to stamp it out. First glimpses of inflation come tomorrow with January’s consumer price index release.