- The price of gold earns traction around $ 2,985 in the first Asian session on Monday.
- Economic uncertainty, Trump’s tariff war and geopolitical risks support the price of gold.
- The US envoy said Trump waited for Trump to talk to Putin this week.
The price of gold (Xau/USD) remains strong about 2,985 $ after a historical maximum of $ 3.005 during the first Asian session on Monday. The weakest American dollar (USD) and economic uncertainty about the impact of a global commercial war provides some precious metal support. The operators expect the US retail sales data, which will be published later on Monday.
The growing commercial war between the US and many of its main business partners has shaken financial markets and has generated fears on the impact on economies around the world. On Thursday, US President Donald Trump threatened to impose a 200% tariff on wine, cognac and other alcohol imports from Europe.
This measure was taken in response to the EU plan to impose tariffs on American whiskey and other products in April, which in turn is a reaction to Trump’s 25% tariffs on steel and aluminum imports that entered into force on Wednesday.
In addition, the weakest dollar after the economic data of the US weakest than expected contributes to the rise in gold. The preliminary reading of the feeling of the consumer of the University of Michigan (UOM) showed that the index reached its lowest level since November 2022, falling to 57.9 from 64.7 in the previous reading. This reading was below the 63.1 market consensus.
The Hutis declared on Sunday that they launched an attack on the USS Harry S Truman aircraft carriers and their support ships in the North of the Red Sea, using 18 ballistic and cruise missiles, as well as drones. “In a context of geopolitical uncertainty and ongoing tariff changes, the appetite for gold remains strong,” said Suki Cooper, a precious metal analyst at Standard Chartered.
However, any positive development or the decrease in fears on conflicts between Russia and Ukraine could drag the price of gold down. Last week, the United States and Ukraine decided to propose a 30 -day fire to Russia. Trump’s envoy, Steve Witkoff, said Sunday that he was waiting for Trump to talk to Russian President Vladimir Putin this week, stating that Putin “accepts the philosophy” of Trump’s high fire and peace’s terms of peace.
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.
