- Xau/USD rises 0.94% after a weak job report despite the judicial decision against Trump tariffs.
- Initial unemployment applications exceed estimates, increasing the pressure on the Fed to consider features of fees.
- US GDP confirms contraction in Q1; The US dollar collapses, feeding the demand for safe shelter for precious metal.
- The judicial decision cancels Trump’s tariffs, promoting appetite for risk and weighing on the US dollar.
The price of gold bounced from weekly minimums of $ 3,245 and rose above $ 3,300 on Thursday, helped by a softer employment report in the United States (USA), while the markets celebrated the decision of an American court to block the tariffs of President Donald Trump. At the time of writing, the XAU/USD quotes at $ 3,318 and earns 0.94%.
The US Department of Labor revealed that the number of Americans who requested unemployment benefits exceeded the estimates and report of the previous week.
The report adds pressure on the Federal Reserve (FED) to relax politics, since the risk of high unemployment has increased. This, together with the confirmation of a contraction in the Gross Domestic Product (GDP) of the US in the Q1 of 2025, sent the US dollar to a fall, which promoted the prospects of the golden metal.
At the last minute of Wednesday, Bloomberg revealed that the US International Trade Court, composed of a panel of three judges, declared that the Trump administration “had mistakenly invoked a 1977 law by imposing its tariffs on the day of liberation to dozens of countries and, therefore, were illegal.”
The decision of the US court released Mexico, Canada and China from the tariffs imposed above, related to the security of the US border and fentanyl traffic. However, tariffs on aluminum, cars and steel remain unchanged. The Trump administration is appealing the decision, and Goldman Sachs expects general tariff policy to remain in force through other legal means.
The headline on the Trump block caused a rally in global actions. Gold fell to a weekly minimum, while the US dollar index (DXY), a measure of the dollar value, reached a weekly maximum of 100.54.
The DXY, which tracks the value of the US dollar in front of a basket of six currencies, falls 0.50% to 99.32.
This week, precious metal merchants are attentive to the publication of the Fed Favorite Inflation Indicator, the Personal Consumer Expenses Price Index (PCE).
Daily Gold Market Movements: The Fall of US returns and the soft dollar boost the Xau/USD
- The yields of the US Treasury bonds are falling after the publication of US data from the 10 -year bonus collapse in four basic points (PBS) to 4.30%. Meanwhile, the US real yields followed the same trend, also lowering four PBS to 2.11%.
- Initial unemployment applications in the US for the week that ended on May 24 increased by 240k, from 226k the previous week and exceeding 230k forecasts.
- The second EE.U. GDP estimation for the first quarter of 2021 was -0.2% of intertrametral contraction, improving from the preliminary estimate of -0.3%.
- Federal Reserve minutes cited uncertainty about the potential impact of tariffs on the economy, with officials adopting a patient posture due to high risks of high inflation and unemployment.
- Policies responsible recognized some risks of stagflation by pointing out that the “Committee could face difficult compensation if inflation turns out to be more persistent while the perspectives of growth and employment are weakened.” They added that they are waiting for the “net economic effects of the variety of changes in government policies become clearer.”
- The data revealed that gold imports to Switzerland from the US reached their highest level from at least 2012 in April.
- The monetary markets suggest that merchants are discounting 49 basic points of relaxation towards the end of the year, after the soft report of initial unemployment applications in the US, according to data from Prime Market Terminal.
XAU/USD technical perspectives: The price of gold recovers $ 3,300, ready to test $ 3,350
The price of gold resumed its upward trend, and at the time of writing, cash prices are close to the maximum daily of May 28, $ 3,325. A daily closure is needed above the latter so that the Xau/USD is ready to challenge the $ 3,350. If it is exceeded, the next key levels of resistance are $ 3,400 and the maximum of May 7, 3,438 $. If it is achieved, the next goal of gold would be $ 3,500.
At the bottom, if gold falls below $ 3,300, the way will open to challenge the $ 3,250. Once surpassed, a movement towards the simple mobile average (SMA) of 50 days at 3,217 $ is in the cards.
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.
