- The price of gold collapses to around $ 3,245 in the first Asian session on Thursday, lowering 1.25% in the day.
- The descale in commercial tensions and a firmer US dollar weigh on the price of gold.
- The US Ee.UU Employment Report will be closely monitored.
The price of gold (Xau/USD) extends the fall to around $ 3,245 during Thursday’s first Asian session. The precious metal moves down close to a minimum of two weeks amid the relaxation of commercial tensions between the US and China and a greater demand for the US dollar (USD).
The feeling of risk is improving after US President Donald Trump sign on Tuesday an executive order aimed at reducing tariffs on foreign cars parts, granting car manufacturers a two -year period to increase national supply. In addition, US Treasury Secretary, Scott Besent, emphasized the “very good” offers of commercial partners.
The US commercial representative Jamieson Greer said Wednesday that the administration of President Donald Trump hopes to conclude initial agreements on tariffs with some US business partners in a matter of weeks. The optimism around tariffs elevates the dollar and weakens the demand for traditional shelter assets such as gold, since yellow metal for the holders of other currencies.
On the other hand, the hopes of rates cuts by the Federal Reserve of the US (Fed) after weaker economic data could help limit losses of the yellow metal. The US economy was contracted at an annualized rate of 0.3% in the first quarter (Q1) of 2025, according to the US Department of Commerce on Thursday. This figure was weaker than the 0.4% estimate and fell from the previous reading of an expansion of 2.4%.
Future contracts come to the Fed starting the feat cuts in June, with a total of four reductions of an expected point, lowering the rate to the range of 3.25% -3.50% by the end of the year. Investors will be attentive to the US employment data that will be published on Friday to obtain a new impulse. The NFP is expected to show 130,000 employment additions in April, while it is estimated that the unemployment rate will be maintained at 4.2%.
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.
