- Gold advances as persistent commercial tensions and the uncertain global economic perspective support refuge assets.
- The ECB rates, Trump’s meeting with the German Chancellor and US employment data are in the focus on Thursday.
- The gold re -tests $ 3,400 while the bulls sign up to the maximum historical of April at $ 3,500.
The gold (Xau/USD) extends its upward movement during the European session on Thursday, with the markets focused on the decision of the European Central Bank (ECB), US employment data and the developments around commercial negotiations before the meeting of US President Donald Trump with German Friedrich Mertz chancellor.
The precious metal is quoted about $ 3,400 at the time of writing. A rupture of this critical level of psychological resistance could open the door to a possible proof of the April historical maximum at 3,500 $.
The ECB is prepared for a 25 basic point interest cut
The European Central Bank (ECB) is expected to announce an interest rate cut of 25 basic points (PB), while the weekly figures of initial unemployment applications in the US will provide additional information on the health of the labor market before the non -agricultural payroll report (NFP) on Friday.
Later in the day, German Frieder Friedrich Mertz will meet with US President Donald Trump in the White House to discuss current geopolitical problems.
Daily gold summary: ECB rates decision, commercial negotiations and US employment data ahead
- Initial unemployment weekly applications in the US are expected to fall to 235K, from 240K reported last Thursday. A reading above the forecasts of analysts could highlight greater weakening in the health of the US labor market.
- Friday’s NFP figures are expected to show that 130,000 new jobs were added to the US economy in May, below 177,000 in April.
- Meanwhile, the unemployment rate in the US is expected to be maintained at 4.2% in May, reflecting an American resilient labor market.
- The weak ADP employment data published on Wednesday showed that only 37K jobs were added to the US private sector in May.
- The feeling of the market remains cautious due to a series of developments, including the rise of US tariffs on steel and aluminum from 25% to 50%, which came into force on Wednesday. The growing tariff threats and the increasing commercial tensions have raised a significant risk for risk assets, while a weaker US dollar has supported gold prices.
- On Thursday, Reuters reported that the Canadian Prime Minister described the “illegal” US tariffs, while Mexico and the European Union expressed similar frustrations.
- On Wednesday, Mexican president Claudia Sheinbaum described the new tariffs of “unfair, unsustainable and without legal foundations”, warning that if an agreement is not reached, Mexico will be forced to respond with reprisal measures.
- Canada and the EU have also threatened with reprisals if trade negotiations are not advanced this week.
Technical Gold Analysis: Bulls drive prices towards psychological resistance at $ 3,400
Gold (Xau/USD) is exhibiting signs of renewed bullish impulse after breaking a well -defined symmetrical triangle in the daily chart.
The rupture above the higher trend line and the key horizontal resistance in $ 3,392 suggests a growing upward feeling, reinforced by a relative force index (RSI) rising above 59.
The sustained closure above the simple mobile average (SMA) of 20 days at $ 3,298 could pave the path for a movement towards psychological resistance at $ 3,500, marking a test of the previous maximum.
However, a movement below the psychological level of $ 3,350 and below the 20 -day SMA could initiate a bearish impulse towards $ 3,291, the fibonacci setback level of 23.6% of the rebound from January to April.
A daily closure below this area would expose the lower limit of the triangle about $ 3,240, and could trigger a deeper correction towards the Fibonacci setback level of 50% around 3,057.
Daily Gold Graph
FAQS GOLD
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.
