- The price of gold ranges within Thursday’s negotiation range around $ 3,335, displaying volatility compression.
- The US President Trump is expected to announce a pair of commercial agreements before the deadline of July 9 tariffs.
- The approval of the Trump Tax Cutting Bill has caused fiscal risks in the US.
The price of gold (Xau/USD) is negotiated well within the negotiation range of Thursday around $ 3,335 during Friday’s European negotiation hours. The yellow metal struggles to find direction while investors expect clarity about how much tariffs will impose US president Donald Trump to their commercial partners, who failed to close a bilateral agreement in the 90 -day pause period.
The president of the USA Trump announced a 90 -day break in the imposition of reciprocal tariffs a week after his announcement on April 2 to give time to his business partners to close a negotiated trade agreement.
Until now, Washington has announced trade agreements with the United Kingdom (United Kingdom) and Vietnam and has secured a framework agreement with China. Earlier in the day, Trump expressed confidence that he will achieve an agreement with a couple of nations, of which India seems to be one. Trump declared this week that he hopes to ensure an agreement with India before the deadline of tariffs of July 9.
Earlier on the day, Trump declared that he will begin to “send letters on commercial tariffs starting Friday.”
Market experts believe that the imposition of reciprocal tariffs by the US to nations such as Japan, the Eurozone, Canada and Mexico, which are its main commercial partners and have not secured a commercial agreement, will destabilize the global trade war.
Theoretically, increased geopolitical tensions increase the demand for shelter assets, such as gold.
Meanwhile, the Green Light to Trump’s “Great Project” by the House of Representatives has also increased the demand for sure refuge of gold price. Investors fear that the bill signed by Trump will increase the already gigantic national debt by 3-3.5 billion dollars in a decade, which could increase tax risks.
Technical Gold Analysis
The price of gold is negotiated near the ascending trend line of an upward triangle formation in a daily frame, which is drawn from the minimum of April 7, 2,957 $. The horizontal resistance of the aforementioned graphic pattern is drawn from the maximum of April 22 around $ 3,500. Theoretically, an asset break below the ascending trend line results in an abrupt fall.
The precious metal oscillates near the exponential (EMA) mobile average of 20 days around $ 3,342, suggesting that the short -term trend is uncertain.
The 14-day relative force (RSI) index oscillates within the range of 40.00-60.00, indicating a lateral trend.
Looking up, the price of gold would enter an unexplored territory after breaking decisively above the psychological level of $ 3,500. Potential resistances would be $ 3,550 and $ 3,600.
Alternatively, a downward movement of the gold price below the minimum of May 29, $ 3,245 would drag it towards the round level support of $ 3,200, followed by the minimum of May 15 at $ 3,121.
Daily Gold Graph
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.
