- Gold jumps after the hard statements of US President Donald Trump about tariffs.
- The fears of recession and the concerns for growth remain high among the operators, while the tariff war continues.
- Operators are increasingly directed towards safe refuge assets as reciprocal tariffs approach.
The price of gold (Xau/USD) has reached a new historical maximum of $ 3,004, before falling below $ 3,000, still registering a weekly gain of more than 2.5% for now at the time of writing on Friday. The additional entry and the demand for links came after the president of the United States (USA) Donald Trump responded to European countertops, saying that 200% tariffs would impose to the wine and the champagne of the region.
This has scared market participants, making them believe that all bets are canceled and that President Trump will not retreat or soften his position on tariffs, further increasing concerns about the growth and demand of risk assets. Meanwhile, US yields reached a new five days on Thursday before going back.
What moves the market today: tariff positioning
- The aggressive tariff agenda of President Donald Trump fueled concerns about the possible impact on growth, harming the demand for risk assets and helping flows to funds brought brought, reports Bloomberg.
- Some shares of Chinese jewelry have risen this week. On Friday, the company Zhejiang Ming Jewelry Co., quoted in the continent, shot down its 10% gain limit for the fourth day. Chow Tai Fook Jewellery Group also went up, showing that traders are looking for associated companies that can benefit from a higher price of gold, Bloomberg reports.
- The Macquarie Group commodities strategy team, led by Marcus Garvey, said Thursday that the holdings are still about 20% below its previous peak in 2020. This means that there is still a wide margin to increase the entrances in the precious metal, reports Reuters.
- The CME Fedwatch tool sees 97.0% probability that there are no changes in interest rates at the next meeting of the Fed on March 19. The possibilities of a rate cut at the May 7 meeting are currently 30.3%.
Technical Analysis: Be attentive to the benefits
The $ 3,000 brand has quickly come into play, just one day after the French bank BNP Paribas said that $ 3,200 would be the target price for gold in the second quarter. With the European and American sessions still ahead, a rapid rise could materialize. However, traders should refrain from entering the rupture of $ 3,000 because this level will probably trigger a short -term benefits.
The new historical maximum at $ 2,993 can be exceeded at any time. Look for the psychological level of $ 3,000 on the way up. Beyond that level, it is an unexplored territory where the resistance and supports of the daily pivot point can help guide the direction. Daily R1 resistance at $ 3,007 and R2 resistance at $ 3,026 are undoubtedly levels to be taken into account.
At the bottom, the daily pivot point is $ 2,970. In case that level is broken, observe the support S1 around $ 2,951. Below, the S2 support is at $ 2,914, preceding the round figure of $ 2,900, which should be strong enough to catch any correction.
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.
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.
