Gold already at 11% return for 2025 with more tariffs coming, Fed Powell’s testimony eyed

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• Gold hits another fresh all-time high at $2,942 and surges over 11% for 2025.

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• Markets got caught by surprise this Monday with countermeasures from China to US President Donald Trump’s tariffs. 

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• The $3,000 is gaining quickly, though tail risks could grow from here. 

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Gold’s price (XAU/USD) has set another record high at $2,942 in early Tuesday trading before paring back nearly all the incurred gains for the day.

 Meanwhile, United States (US) President Donald Trump has imposed 25% tariffs on steel and aluminum imports for all countries as of March 12,, while China has quietly imposed retaliatory tariffs on some US goods. China is only showing its teeth by now and has not gone full blazing, while US President Trump is nowhere near his promised 60% levies on all Chinese products as announced earlier in his campaign, Bloomberg reports. 

Meanwhile, traders will focus on Federal Reserve (Fed) Chair Jerome Powell’s semiannual testimony to lawmakers on Tuesday and Wednesday for fresh clues about the path the US monetary policy will take. Powell is likely to highlight the resilient economy as a key reason central bankers are in no rush to cut borrowing costs further. This is a big risk for Gold this Tuesday, as it could be a bearish element for bullion.

Daily digest market movers: Tariff safe haven

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• At 15:00 GMT, Fed Chairman Jerome Powell testifies before the US Senate Banking Committee 

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• US President Donald Trump said on Monday that the latest round of levies, which go into effect in March, would bolster domestic production and bring more jobs to the US. He also warned the tariffs “may go higher”, Bloomberg reports.

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• The CME FedWatch tool shows a 93.5% chance that interest rates will remain unchanged in March, compared to a slim 6.5% chance of a 25 basis point (bps) interest rate cut. 

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Technical Analysis: Resistance levels to watch

A whopping 11% of gains so far this year is making bullion already the favorite trade for the first quarter. Tail risks are set to kick in though, with Fed Chairman Powell to speak later this Tuesday at Capitol Hill. If his speech is hawkish, yields are expected to surge, which could spark some sizable profit-taking in the Gold rally. 

The Pivot Point level on Tuesday is the first nearby support at $2,891, followed by the S1 support at $2,871. From there, S2 support should come in at $2,835. In case of a correction, the bigger $2,790 level (October 31, 2024, high) should be able to catch any falling knives.

On the upside, the R1 resistance comes in at $2,928, which was already tested earlier this Tuesday. In case the rally recovers again in the European and US sessions, the $2,950 level, which is the confluence of a big figure and the R2 resistance, will be tested for a break to the upside. Further up, the $3,000 psychological level could be next.

XAU/USD: Daily Chart