- The price of gold recovers part of the lost land at around $ 3,180 in the first Asian session on Thursday.
- The decrease in tensions in the Global Socava War Socava the price of gold.
- Retail and IPP sales reports of the US will be at the center of attention later on Thursday.
The price of gold (Xau/USD) quotes with slight profits about $ 3,180 during the first Asian session on Thursday. However, the rise potential for yellow metal could be limited in the short term due to a better appetite for risk and advances in commercial conversations.
The precious metal remains defensive as tensions decrease in the global trade war, moving away investors in the demand for safe refuge. The US and China agreed to reduce tariffs from each other after two days of negotiations in Geneva, Switzerland. USA reduced tariffs on Chinese imports to 30% from 145%, while China cut tariffs on US imports to 10% from 125%.
“In general, it is a feeling of improved risk that for now has reduced the attractiveness of gold,” said Ole Hansen, head of raw material strategy in saxo bank a/s.
A high advisor to Iran’s supreme leader, Ali Shamkhani, said Wednesday night that Iran is ready to sign a nuclear agreement with certain conditions with the US president, Donald Trump, in exchange for the lifting of economic sanctions. These positive developments contribute to the fall of gold.
However, commercial uncertainties and increasing geopolitical risks could help limit gold losses. The operators will be attentive to the publication of US retail sales and production price index (IPP) for April later on Thursday. In addition, the president of the Federal Reserve (FED), Jerome Powell, is scheduled to speak.
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.
