- Gold starts a winning streak, climbing more than 4% in just two days of negotiation.
- The geopolitical risks of the Trump administration, the turbulence of Asian currencies and Israel are driving investors to return to gold.
- The risks rise persist on several fronts, increasing the possibilities that gold will prove its historical maximum of $ 3,500.
Gold (Xau/USD) reaches $ 3,380 at the time of writing, having registered a new two weeks while geopolitical tensions worldwide continue to support the demand for investors for safe refuge assets. In the Middle East, Israel is preparing even more for its land offensive in the Gaza Strip with the aim of completely controlling the area.
In the USA (USA), the pressure is increasing over US President Donald Trump and his administration to finally announce a first commercial agreement. Trump and his Cabinet have been very vowels about the imminence of the agreements, with the US Secretary of Commerce, Howard Lutnick, saying that the first commercial agreement will be with one of the ten main economies, Fox reported News.
Meanwhile, some very sudden movements in the currency market They also keep investors in suspense. The operators are trying to evaluate how to position themselves after the fall of the Taiwan dollar (TWD) observed on Monday, after it was sharply appreciated against the US dollar (USD). The greatest risk is that this has a domino effect on the US dollar – that could weaken in front of other main Asian currencies – making it no longer a stable and reliable safe currency and, therefore, benefiting gold.
An additional element that pushes precious metal even higher this Tuesday comes from German Bundestag, the German Parliament. A rather ceremonial vote to ensure the nomination of Chancellor Friedrich Merz failed to obtain a majority. This event has never taken place in German history and means that the chancellor has already lost the confidence of the majority of the coalition, which opens the door to political uncertainty in Germany without clues about when a new vote could take place, or if a new chancellor needs to be chosen, or even if new early elections must be held.
What moves the market today: Carney visits Washington
- The newly nominated Canadian Prime Minister Mark Carney will meet with US President Donald Trump in the White House on Tuesday to discuss the recent implementations of Trump administration tariffs on Canadian goods.
- The feeling of the market is improving slightly on Tuesday after the Taiwan dollar movement (TWD) on Monday, but the focus on Asian currencies persists. The Saxopur Saxopur Head of Investment Stratega, Charu Chanana, said that “the true action today is in the Asian FX.” Chanana continued to say that “if these currencies continue to strengthen abruptly, it could generate fears of a ‘inverse Asian currency crisis’, with possible chain effects on the bond market amid fears that Asian institutions reassess their exhibition not covered to treasure bond holdings,” reports Reuters. In general, gold benefits when American bonds begin to show lower yields for investors.
- The Shanghai Gold Stock Expand its network of warehouses to Hong Kong, helping to raise the profile of its products called in Yuan, including precious metal beyond continental China, Bloomberg reports.
- The CMM Fedwatch tool shows that the probability of a cut of interest rates by the Federal Reserve at the May meeting is 2.4% compared to a 97.6% probability that there are no changes. The June meeting presents a probability of 29.8% of a rate cut.
Technical analysis of the price of gold: show me the offers!
The price of gold It is rising in what seems to be a second wave of safe refuge in the precious metal. The balances and powers in the financial markets are changing, and one of them seems that the dollar is losing its status as safe shelter for the benefit of the ingot. In this scenario, gold is prepared to shoot if President Trump and his administration cannot soon announce a commercial agreement with a country, preferably one of the G20.
On the positive side, resistance R1 at $ 3,368 has already been surpassed in an upward test in the first operations on Tuesday. If there is a follow -up, R2 resistance at $ 3,403 could be tested very quickly. The historical maximum of $ 3,500 could be a bit too far for operators to try it on Tuesday.
On the negative side, the pivot point at $ 3.303 is the first level to observe. Below, the daily support S1 is at $ 368, coinciding with the minimum of last week of April 30, 25 and 23. The technical level at $ 3,245 should work and maintain in case of any sudden reversion.
Xau/USD: Daily graphic
US interest rates
Financial institutions charge interest rates on loans to borrowers and pay them as interest to savers and depositors. They influence the basic types of interest, which are set by central banks based on the evolution of the economy. Normally, central banks have the mandate to guarantee the stability of prices, which in most cases means setting as an objective an underlying inflation rate around 2%.
If inflation falls below the objective, the Central Bank can cut the basic types of interest, in order to stimulate credit and boost the economy. If inflation increases substantially above 2%, the Central Bank usually rises the interest rates of basic loans to try to reduce inflation.
In general, higher interest rates contribute to reinforce the currency of a country, since they make it a more attractive place for world investors to park their money.
The highest interest rates influence the price of gold because they increase the opportunity cost of maintaining gold instead of investing in an asset that accrues interest or depositing effective in the bank.
If interest rates are high, the price of the US dollar (USD) usually rises and, as gold quotes in dollars, the price of low gold.
The federal funds rate is the type to a day that US banks lend each other. It is the official interest rate that the Federal Reserve usually sets at its FOMC meetings. It is set at a fork, for example 4.75%-5.00%, although the upper limit (in this case 5.00%) is the aforementioned figure.
Market expectations on the interest rate of the Federal Reserve funds are followed by the Fedwatch of the CME tool, which determines the behavior of many financial markets in the forecast of future monetary policy decisions of the Federal Reserve.
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
