- Gold reduced losses due to the weakness of the US dollar to prove the resistance of the trend line at $ 3,325.
- The greatest hopes of fed cuts sent the US yet yields, undermining the attractiveness of the US dollar.
- XAU/USD keeps the broadest bassist at stake while below $ 3,325 and $ 3,345.
The gold (Xau/USD) found buyers just below the level of $ 3,300 on Wednesday to recover part of the land lost in the previous days. The withdrawal in US yields is supporting the precious metal, but the broader trend remains bassist, while being below the resistance of the trend line, at $ 3,325.
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The minutes of the last meeting of the Federal Reserve increased the hopes of at least one rate cut in 2025, which interrupted a five -day rebound in the yields of the US Treasury bonds. The US dollar fell on all fronts, and gold without performance rebounded.
Technical analysis: Xau/USD will face resistance at $ 3,325 and $ 3,345
A look at the 4 -hour graph and we see that the price action is testing the resistance of the descending trend line from the maximum of mid -June, at $ 3,325. The relative force index (RSI 14) has crossed above level 50, showing a growing upward boost, but the torque should exceed this level and the maximums of July 4 and 7, at $ 3,345, to confirm a change in trend.
Above here, the following objective would be the 3,400 $ area, which limited the upward attempts on June 17, 18 and 22, and that closes the road to the maximum of June, at $ 3,452.
A rejection from the current level, on the contrary, is likely to seek support in the minimum of July 9, at $ 3,285, before the minimum of May 28 and June 30, at $ 3,245 and the minimum of May 20 at $ 3,205.
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.
