- The price of gold is recovered at about $ 3,320 despite the growing hopes of a commercial agreement between the US and the EU.
- Putin de Russia requires that NATO restrines its expansion to the east in writing.
- Investors expect the FOMC minutes and the US PCE inflation data for April.
The price of gold (Xau/USD) attracts offers and rises to about $ 3,320 during Wednesday’s European negotiation hours, after a mass sale of more than 1% the previous day. The yellow metal rises despite the fact that investors feel increasingly confident that the United States (USA) and the European Union (EU) will soon ensure a commercial agreement.
On Tuesday, US President Donald Trump expressed confidence in a publication in Truth. Social that the EU is making quick efforts to sit at the table for commercial negotiations with Washington.
“I was extremely satisfied with the 50% tariff allocation to the European Union, especially because they were” moving slowly. “
This occurs in a context of improvement in global economic perspectives, since both economies trade a significant part of the global business. Theoretically, signs of decreased global economic uncertainty reduce the demand for refuge assets, such as gold.
The optimism on the commercial agreement between the EU and the US has also supported the US dollar (USD). During European negotiation hours, the US dollar index (DXY) yields its initial profits and falls back to about 99.50 from the maximum intradication of 99.85. Although it has been significantly recovered from the monthly minimum of 98.70 registered on Monday. Technically, a stronger US dollar makes the price of gold a expensive bet for investors.
What moves the market today: the price of gold awaits the FOMC minutes
- The next great trigger for the price of gold will be the publication of the minutes of the Federal Open Market Committee (FOMC) of the May Policy Meeting, scheduled for 18:00 GMT. FOMC minutes are expected to provide a detailed explanation behind the Federal Reserve (FED) decision to maintain stable interest rates in the range of 4.25%-4.50%.
- After the announcement of the interest rate, the Fed guided to maintain stable interest rates for a period long enough until officials obtain clarity about economic performance due to the imposition of new economic policies under the leadership of the president of the USA, Donald Trump. The Fed also warned that the risks of greater unemployment and inflation have increased.
- This week, investors will also focus on the data of the US Personal Consumption Expenditure Index (PCE) for April, which will be published on Friday. However, the impact of inflation data is expected to be limited, since Fed officials have warned that tariffs imposed by the White House could disagree the expectations of consumer inflation.
- On Tuesday, the president of the Bank of the Fed of Minneapolis, Neel Kashkari, supported keeping interest rates for a longer time amid the high uncertainty about Trump’s tariff policy. “Until there is more clarity on the path of tariffs and its impact on prices and economic activity, it is better to maintain a patient posture on monetary policy, which is probably only moderately restrictive now,” Kashkari said.
- In the geopolitical front, the hopes of a high fire between Russia and Ukraine have decreased, which could support the price of gold. The Russian leader, Vladimir Putin, has demanded guarantees to Western leaders to restrict the expansion of NATO to the east in writing and elimination of sanctions to their nation to end the war in Ukraine.
Technical Analysis: The price of gold maintains the EMA of 20 days
The price of gold fights around an ascending line of trend in a daily framework around $ 3,335, which is drawn from the maximum of December 12, $ 2,726. However, the short term of the precious metal is bullish, since it remains above the 20 -day exponential (EMA) mobile average, which is negotiated around $ 3,288.
The 14-day relative force (RSI) index oscillates within the range of 40.00-60.00, which suggests indecision among market participants.
Looking up, the maximum of May 7 around $ 3,440 will act as a key resistance to metal. At the bottom, the minimum of May 15 in $ 3,120 will be the key support zone.
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.
