- The price of gold moves down about $ 3,320 in the first bars of the Asian session on Monday.
- The solid employment data of the US of June weigh on gold as the probabilities of fed fees decrease.
- Geopolitical risks in the Middle East and renewed commercial tensions could limit the fall in the price of gold.
The price of gold (Xau/USD) attracts some sellers around $ 3,320 during the first part of the Asian session on Monday. The precious metal moves down since the US Non -Agricultural Payroll (NFP) report altered the Federal Reserve Policy expectations (FED). The operators prepare for the minutes of the Federal Open Market Committee (FOMC) later on Wednesday in search of a new impulse.
Non -agricultural payrolls of the US were stronger than expected, increasing by 147,000 jobs in June since 144,000 in May (reviewed from 139,000). In addition, the unemployment rate remained stable at 4.1% in June. These reports indicated continuous resilience in the labor market, reducing the possibility of a short -term monetary accommodation by the Fed. This, in turn, supports the US dollar (USD) and exerts some sales pressure on non -profitable assets such as gold.
On the other hand, the possible fall of the yellow metal could be limited amid the renewed geopolitical tensions in the Middle East. Israel declared Sunday night that the country’s army had attacked huti objectives in three ports and an energy plant in Yemen. Defense Minister Israel Katz confirmed the attack, saying that they were carried out due to repeated attacks by the rebel group backed by Iran against Israel. Any sign of climbing could increase the flows to safe shelters, benefiting the price of gold.
Gold operators will closely monitor developments around tariff policies. CBBC reported Sunday that US Treasury Secretary Scott Besent said that US President Donald Trump will send letters to some commercial partners saying that tariffs will return to the levels of April 2 on August 1 if there is no progress in the commercial agreement. Renewed commercial tensions could raise the price of gold in the short term.
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.
