• Markets are facing a knee-jerk reaction after President-elect Trump pushes back on rumors of universal tariffs.
• Earlier Monday morning, headlines emerged that President-elect Donald Trump may be considering imposing a universal tariff on key imports.
• Gold price remains in a technical pennant formation as breakout pressure builds.

The gold price (XAU/USD) reverses gains and falls to around $2,633 on Monday after rising rapidly on the first trading day of 2025 as investors were quite eager and quickly reopened their reduced positions they had before Christmas. Since then, gold prices have started to decline somewhat, even though US yields have remained rather elevated. The knee-jerk reaction is gaining momentum following headlines that President-elect Donald Trump may consider imposing a universal tariff on key imports. These headlines were pushed forward by President-elect Trump himself, who announced that the tariffs would be implemented in their original form.

While gold prices may be consolidating, the number of moving parts on the geopolitical front is increasing. Italian Prime Minister Giorgia Meloni broke with the common European position and voluntarily visited President-elect Donald Trump. Meanwhile, Canadian Prime Minister Justin Trudeau will likely resign this week, according to Bloomberg News. According to Bloomberg, the headlines throughout the day were the back of a Washington Post article that mentioned that President-elect Donald Trump was considering simply implementing a universal tariff on critical goods.

Daily summary of market players: which one is it now?

• President-elect Donald Trump is referring to previous comments that the proposed tariff systems will remain unchanged, as previously reported.
• Earlier Monday, President-elect Donald Trump is considering simplifying his approach to tariffs by imposing global tariffs only on critical U.S. imports, according to the Washington Post.
• Markets are entering the first normal trading week of 2025 with a very busy economic calendar, and the centerpiece of the week will be the release of U.S. nonfarm payrolls data on Friday.
• The yield on US 10-year bonds rose to 4.639% last week, the highest level in seven months. It will fall to 4.57% on Monday, with yields falling as bond auctions continue amid news on universal tariffs.
• CME’s Fedwatch tool currently shows only a slim 10% chance of a 25 basis point (bps) rate cut in January. Additionally, the Fed is expected to remain data-dependent, and uncertainties could impact the path of inflation once President-elect Donald Trump takes office on January 20.
• Several European countries have published their individual purchasing managers’ indexes (PMIs) for the services sector. France, Germany and Spain recorded good rebounds, with narrowly exceeding expectations.
• S&P Global’s U.S. Services PMI came in slightly lower at 56.8, missing the consensus reading of 58.5 and the previous reading.

Technical Analysis: We’re going nowhere for now

Technically, the gold price is stuck in a pennant chart pattern because it follows an ascending and descending trend line. A breakout could occur at any time, although it should be expected a little later as buyers and sellers move closer together.

On the other hand, the 100-day plain moving average (SMA) at $2,627 is holding for now, although under pressure. The uptrend line of the pennant formation should provide support around $2,606, as it has done in the last three cases. If this support line breaks, a quick decline to $2,531 could return as support level.

On the other hand, the 55-day SMA at $2,658 is the first level to break. This will not be an basic task, as we proved it as a forceful resistance twice last week. If it is broken, the final upside level will be $2,690 as a downward trendline in a pennant formation.

XAU/USD: Daily chart