- Gold sees profits of more than 2.50% available for this week.
- President Trump commented that he might not impose tariffs on China after a phone call with Xi Jinping from China.
- The gold is close to a historical maximum by $ 2,790 and is ready to close the week with a firm gain.
The price of gold (Xau/USD) continues to recover, quoting at $ 2,778 at the time of writing on Friday, and could reach a new historical maximum at any time after the US president, Donald Trump, surprised with comments with comments The previous day that threw doubts about the application of tariffs to China. The comments occurred after Trump had a phone call with the president of China, Xi Jinping. Meanwhile, US yields are going back after the Bank of Japan (BOJ) raised interest rates at 25 basic points.
In the front of the economic data, the US will receive this Friday the preliminary readings of the Global S&P PMI) Purchase Management Index for January. The University of Michigan will close the day with its consumer’s feeling index for January, the final reading. The risk of headlines could resume prominence with the president of the USA, Donald Trump, adding comments on tariffs.
What moves the market today: will this believe this?
- The president of the USA, Donald Trump, commented on his phone call with the Chinese prime minister, Xi Jinping, who does not want to impose tariffs on China and that an agreement would be more constructive, Bloomberg reported.
- President Trump also talked about the Federal Reserve (Fed) and US rates, stating that he would demand an immediate reduction. Although lower indebtedness costs are usually bullish for precious metals, merchants are cautious since monetary policy is established by the Central Bank, which will publish its decision on interest rates next week, Bloomberg reports.
- The US yields are far from their weekly minimums, with the reference rate to 10 years of the US currently quoting at 4,625%, recovering from their poor performance earlier this week at 4,528%. However, it still has a long way to go before reaching the maximum of more than one year of last week at 4,807%.
Technical analysis: Wolf with lamb skin
The price of gold rises again, thanks to the statement of the president of the United States, Donald Trump, after his phone call with the Chinese president, Xi Jinping, that he would prefer not to impose tariffs on China. It seems that Trump is going back in previous comments during his campaign. A tail risk could grow here, in case the negotiations do not go as Trump wants, it can still implement tariffs anyway.
The first support line remains $ 2,721, a kind of double roof in November and December broken on Tuesday. Just below that, $ 2,709 (minimum of October 23, 2024) is in focus as a second close support. In the event that both levels mentioned are broken, look for a drop back to $ 2,680 with a large -scale mass sale.
Gold is back in its path to the historical maximum of 2,790 $, which is less than 1% of the current levels. Once above that, a new historical maximum will be presented. Meanwhile, some analysts and strategists have predicted calls to $ 3,000, but $ 2,800 seems to be a good starting point such as the next rising resistance.
Xau/USD: Daily graphic
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 weaker 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.
