- The price of gold attracts some buyers in the middle of the current USD sales trend.
- The optimism around the truce between Israel and Iran acts as an obstacle to merchandise.
- The operators now expect the US macroeconomic data for a new impulse.
The price of gold (Xau/USD) is negotiating with a slight positive bias for the second consecutive day on Thursday, although it lacks continuation in the middle of mixed fundamental signals. The US dollar (USD) falls to its lowest level since March 2022, since the new US president’s attack, Donald Trump, feeds concerns about the possible erosion of the independence of the Federal Reserve of the US (Fed). In addition, the growing acceptance that the US Central Bank will further reduce indebted costs this year turns out to be a key factor that acts as a wind in favor for yellow metal without performance.
Meanwhile, a high fire between Israel and Iran remains for now, and optimism continues to support the feeling of global risk. This, in turn, maintains a limit on the price of gold as a safe refuge and justifies some caution for upward operators. Market participants now expect the US macroeconomic data, which, together with the discourses of influential FOMC members, could provide a new boost to the precious metal later during the North American session. However, the attention remains focused on the publication of the US Personal Consumption Expenditure Index (PCE) on Friday.
What moves the market today: the price of gold receives support from a weaker USD and betting of fed fees
- The president of the USA, Donald Trump, intensified his criticisms of the president of the Federal Reserve, Jerome Powell, for not cutting fees and said he was considering several candidates to replace him. In fact, Powell reiterated on Wednesday that the Central Bank is well positioned to wait to cut interest rates until the inflationary effects of the wide Trump tariffs are better known.
- The Trump-Powell confrontation joins the bets that the Fed will cut interest rates in at least 50 basic points before the end of the year. This, in turn, drags the US dollar to a minimum of more than three years and helps the price of gold without yield to attract some buyers for the second consecutive day on Thursday, although the intradic rebound seems to lack bullish conviction.
- The fragile truce between Israel and Iran continues to maintain, with Trump declaring victory despite the uncertainty about the magnitude of the damage to the enrichment assets of Uranium of Iran. However, optimism slows down to the xau/USD bulls to perform aggressive bets and justify a certain caution before positioning for any additional upward movement.
- Looking ahead, the operators now look at the US economic agenda, which includes the publication of the final impression of the GDP of the first quarter, the usual weekly applications of unemployment subsidy, the orders of durable goods and the sales of pending housing. In addition to this, investors will closely examine the comments of the FOMC members in search of clues about the Fed Rate Cot Camade, which should influence the merchandise.
- Market attention will then be transferred to the US Personal Consumption Expenditure Index (PCE), which will be published on Friday. Crucial inflation data will play a key role in determining the following directional movement for the USD and will influence the precious metal, which, until now, has been fighting for registering a significant recovery from a minimum of more than two weeks.
The mixed technical configuration of the price of gold justifies caution before positioning for a firm direction in the short term
From a technical perspective, the break this week below the lower end of an ascending channel in the short term was seen as a key trigger for the bassists of the Xau/USD. However, neutral oscillators in daily graphics and 4 hours and lack of acceptance below the 300 $ mark justify a certain caution. Therefore, it will be prudent to wait for a continuation sale below that level before positioning for any additional loss towards the 3,245 $ region. The descending trajectory could extend even more and drag the price of gold towards the horizontal support of $ 3.210 -3,200 $ en route to the 375 $ area.
On the other hand, any subsequent rise movement will probably attract new sellers and remain limited near the 3,368 $ -370 $ region, or the rupture point of the trend channel support. A sustained strength could allow the price of gold to recover the round figure of $ 3,400, which, if it exceeds decisively, could cancel the negative perspective and change the short -term bias in favor of the upward operators. The Xau/USD could then rise to the intermediate resistance of 3,434 $ -3,435 on a route to the area of ​​3,451 $ -3,452 $, or a maximum of almost two months reached last week, and the historical peak, around the psychological brand of 3,500 $.
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.
