- Gold recovers with commercial uncertainty, US debt problems affect the US dollar.
- Investors await the data of the USM manufacturing PMI of the US and the comments of the Fed Powell.
- The Xau/USD is in a positive trend, with the bullies pointing at $ 3,365 and $ 3,3415.
Gold (Xau/USD) has been one of the main beneficiaries of the massive sale of the US dollar on Monday. The precious metal has risen about $ 60 so far, while the US dollar falls in general due to a mixture of commercial uncertainty and imminent concerns about US fiscal health.
Trump shook the markets on Friday, announcing plans to double tariffs on steel and aluminum imports, and still had time to open a new front in a confrontation with China on mineral trade.
Investor concerns that these developments end up weighing about growth and fueling inflation have revived stagning fears. This, together with the continuous fears of the impact of a draft tax cuts that will increase the US debt, has given a new boost to the trade of “selling America” ​​that it has been so positive for gold in recent months
Technical Analysis of Xau/USD
Gold prices seem to have completed the corrective movement last week, ready to resume its broader bullish trend, driven by a weaker USD. The figures of the USM manufacturing PMI and Powell’s comments today will probably determine the direction of the US dollar.
The bullies are testing three weeks at 3,365 $ at this time. A confirmation above this level will clear the road to $ 3,415 before the May peak at $ 3,440.
At the bottom, the immediate support is located in the area of ​​3,285 $ and $ 3,345.
4 -hour xau/USD graphics
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.
