Yesterday Tuesday (January 21), influenced by Trump's tariff threat, investors flocked to the safe haven asset gold. In addition, the US dollar rose and fell back, the yield of US treasury bond bonds fell sharply, and the gold price soared to the highest point in more than two months.

Spot gold closed up $37.08, or 1.37%, at $2744.29 per ounce on Tuesday.

Last October, the gold price reached a historical high of $2790.15 per ounce.

Analyst Christian Borjon Valencia pointed out that after Trump threatened tariffs on his first day in office, investors sought safe haven and gold prices soared on Tuesday. The gold price has cleared the key resistance level of $2730 per ounce.

US President Trump has stated that he is considering imposing a 25% tariff on Mexico and Canada, and "I believe we will do it on February 1st.

According to Reuters, Trump confirmed that imposing universal tariffs on all imported goods from the United States is also under consideration and will be implemented at a later stage. The "comprehensive tariff" policy proposed by Trump during the campaign to impose 10% to 20% on all imported goods.

Trump also threatened to impose tariffs on the European continent soon, stating that "the deficit with the EU will be resolved by imposing tariffs or having the EU purchase our oil and gas.

It is expected that Trump's extensive trade tariffs will further stimulate inflation and trigger a trade war, which may increase the safe haven appeal of gold.

Daniel Ghali, a commodity strategist at TD Securities, said on Tuesday, "Today's trend is mainly due to the possibility of the United States implementing comprehensive tariffs after Trump takes office as president, but there is only a little bit of relevant information

2017 was Trump's first year in the White House, when gold prices skyrocketed by 13%, marking the best annual performance in seven years.

In addition, the US dollar index fell sharply from its high on Tuesday, and the yield of US treasury bond bonds fell, which was beneficial to the gold price.

The US dollar index closed down 0.1% on Tuesday at 107.95; The intraday US dollar index soared to 108.79 at one point. The weakening of the US dollar index makes gold cheaper for holders of other currencies.

The yield of the US 10-year treasury bond bond fell 5.5 basis points to 4.572% on Tuesday.

Valencia added that the escalating tensions in the Middle East have increased global uncertainty and elevated the safe haven status of gold.

In the Middle East, the ceasefire agreement between Israel and Hamas has been put on hold as the Israeli army begins operations in the West Bank city of Jennin. In response, Hamas called for an escalation of the fighting against Israel.

In times of economic and geopolitical uncertainty, gold is considered a safe investment.

Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, stated that the market may still be concerned about next week's FOMC meeting and personal consumption expenditure (PCE) data, particularly inflation data. Although no one expects any action from the Federal Reserve next week, the market is certainly closely monitoring its policy statements for hints about policy for the rest of this year

How to trade gold?

Analyst Christian Borjon Valencia pointed out that the gold price has returned to an upward trend, as the bulls have not been able to break through the high of $2725 per ounce on December 12 last year. This opens the door for gold prices to challenge the psychological barrier of $2750 per ounce.

Once the gold price breaks through the above important barriers, it will aim for a historical high of $2790 per ounce, followed by $2800 per ounce.

On the contrary, Valencia added that if sellers push the gold price below $2700 per ounce, the first support level will be the January 13 low of $2656 per ounce, followed by the 50 day and 100 day simple moving average convergence zone of $2642-2644 per ounce.