- The price of gold drops on Tuesday in the midst of the diminished probabilities of a rate cut by the Fed in July.
- Concerns about the economic repercussions of Trump’s tariffs weigh on the feeling of investors.
- The appearance of a certain weakness of the USD helps to limit losses for the Xau/USD torque.
The price of gold (Xau/USD) remains depressed when entering the European session on Tuesday, although it lacks bassist conviction and remains comfortably above a minimum of a week reached the day before. The expectations that the tariffs of US President Donald Trump would hold inflation in the US in the coming months and force the Federal Reserve (Fed) to maintain stable interest rates turned out to be a key factor that undermines yellow metal without performance.
The US dollar (USD), however, struggles to attract buyers amid concerns about possible economic repercussions of Trump’s commercial tariffs and tax concerns in the US. Operators also seem reluctant and choose to wait for more clues on the Fed fees cut before opening new directional positions. Therefore, attention remains focused on FOMC minutes on Wednesday.
What moves the market today: the bulls of the price of gold remain on the margin in the middle of the reduction of the expectations of cutting the fees of the Fed
- The president of the United States, Donald Trump, extended the deadline for the imposition of reciprocal tariffs until August 1 and also published letters that delineate higher commercial tariffs against a series of Asian and African countries. Trump also threatened that any country that is aligned with BRICS anti -American policies will be taxed with an additional 10% tariff and there will be no exceptions to this policy.
- The Federal Reserve is expected to maintain high interest rates anticipating inflation worsening as a result of higher import taxes and an still resistant US labor market. This, in turn, raised the US dollar to a maximum of almost two weeks on Monday and turned out to be a key factor that undermines the demand for the price of gold without performance during the Asian session on Tuesday.
- However, the USD bulls seem reluctant in the midst of uncertainty about the potential economic impact of Trump’s tariffs and tax concerns in the US. In addition, a new wave of global risk aversion – as reflected in a sea of red in global values markets – could support the precious metal of safe refuge and justify the caution for aggressive bearish operators.
- In the absence of relevant economic data that move the market in the US on Tuesday, the market approach will remain focused on the publication of the Minutes of the FOMC meeting on Wednesday. Investors will seek more clues on the Fed rates cut path, which, in turn, will boost the demand of the USD in the short term and will provide a new directional impulse to the yellow metal without performance.
Gold price bassists have the advantage while they are below the SMA of 100 in H4; The level of $ 3,300 is key
The positive rebound of the previous night faced rejection near the simple mobile average (SMA) of 100 periods in the 4 -hour graph. The aforementioned barrier is currently located near the 3,347-3,348 $ region and is followed by the supply zone of 3,358-3,360 $. A sustained strength beyond the latter could trigger a short coverage movement and allow the price of gold to recover the round figure of $ 3,400.
On the other hand, the area of 3,300-3.295 could continue to protect the immediate fall, below which the Xau/USD torque could accelerate the fall towards the following relevant support near the horizontal zone of $ 3,270. The downward trajectory could extend and eventually drag the price of gold to the 3,248-3,247 $ region, or the monthly minimum of June.
GOLD – FREQUENT QUESTIONS
Gold has played a fundamental role in the history of mankind, since it has been widely used as a deposit of value and a half of exchange. At present, apart from its brightness and use for jewelry, precious metal is considered an active refuge, which means that it is considered a good investment in turbulent times. Gold is also considered a coverage against inflation and depreciation of currencies, since it does not depend on any specific issuer or government.
Central banks are the greatest gold holders. In their objective of supporting their currencies in turbulent times, central banks tend to diversify their reserves and buy gold to improve the perception of strength of the economy and currency. High gold reserves can be a source of trust for the solvency of a country. Central banks added 1,136 tons of gold worth 70,000 million to their reservations in 2022, according to data from the World Gold Council. It is the largest annual purchase since there are records. The central banks of emerging economies such as China, India and Türkiye are rapidly increasing their gold reserves.
Gold has a reverse correlation with the US dollar and US Treasury bonds, which are the main reserve and shelter assets. When the dollar depreciates, the price of gold tends to rise, which allows investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rebound in the stock market tends to weaken the price of gold, while mass sales in higher risk markets tend to favor precious metal.
The price of gold can move due to a wide range of factors. Geopolitical instability or fear of a deep recession can cause the price of gold to rise rapidly due to its condition of active refuge. As an asset without yield, the price of gold tends to rise when interest rates lower, while the money increases to the yellow metal. Even so, most movements depend on how the US dollar (USD) behaves, since the asset is quoted in dollars (Xau/USD). A strong dollar tends to keep the price of gold controlled, while a weakest dollar probably thrusts gold prices.
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.
