- The Xau/USD quotes at $ 3,386, extending the rally for the speculation of fed features.
- Une.uu unemployment requests exceed 240K per second week; Inflation cools.
- Israel, according to reports, is considering a military attack on Iran, adding geopolitical risk.
The price of gold is recovered for the second consecutive day, close to testing the figure of $ 3,400 after the publication of softer inflation and employment data in the United States (USA) while geopolitical tensions grow in the Middle East. The XAU/USD quotes at $ 3,386 at the time of writing.
The feeling of the market remains optimistic, after reports of consecutive positive inflation in the US, which are pressing the Federal Reserve (Fed) to reduce interest rates, since the economy has not yet shown the complete impact of tariffs on prices. The labor market continues to exhibit some weakness, since the number of Americans who request unemployment benefits exceeded 240,000 for the second consecutive week.
Apart from this, ABC reported that Israel is considering taking military measures against Iran in the next few days. Meanwhile, US senior advisor Steve Witkoff will meet with Iranian officials this weekend in Oman.
Regarding commercial policy, the US and China agreed on Wednesday, revealed US secretary of Commerce, Howard Lutnick. The agreement is pending approval by President Donald Trump and Chinese President Xi Jinping.
Before this week, the US economic agenda will present the consumer’s feeling index of the University of Michigan (UOM) for June. Next week, the attention of the traders will focus on the monetary policy meeting of the Federal Reserve (FED) from June 17 to 18.
What moves the market today: the price of gold shoots while the dollar and the US yets fall
- The dollar collapses to minimum of three years, according to the US dollar index (DXY). The DXY, which tracks the value of the dollar against a pairs basket, fell 0.60% to 97.99 after reaching a minimum of several years of 97.60.
- The yields of the US Treasury bonds are falling, since the 10 -year Treasury performance has dropped five basic points (PBS) to 4,367%. The real US yet yields followed the same trend, losing five basic points to 2,097%, promoting the advance of gold.
- The US Production Price Index (IPP) in May rose 2.6% year -on -year, one tenth above the reading of April 2.5%. The underlying IPP – which excludes volatile elements such as food and energy – dropped from 3.1% to 3% year -on -year.
- Monthly, the IPP was mainly moderate, rising an intermensual 0.1%, below the 0.2% expected by consensus. Excluding food and energy, the IPP rose 0.1%, lowering 0.3%.
- Geopolitical tensions remain high, as recognized by the US president Trump, who said that Israel could attack Iran in the next few days. Sources cited by The Washington Post pointed out that US intelligence officials are increasingly concerned about an Israel attack to Iran without Washington’s approval.
- The monetary markets suggest that traders are discounting 51 basic relief points towards the end of the year, according to Prime Market Terminal data.
Fountain: Prime Market Terminal
XAU/USD technical perspective: The price of gold is consolidated about 3,400 $
The price of gold seems to be prepared to test higher levels in the short term, since the price action remains constructive. The yellow metal has registered a successive series of higher and higher minimums, quoting near the figure of $ 3,400, which, once passed, could open the door to more profits.
The relative force index (RSI) is bullish and has exceeded the last peak, indicating that buyers are gaining impulse. Therefore, if the Xau/USD extends its profits beyond $ 3,400, you could test key resistance levels. Next is the 3,450 $ brand, followed by the historical maximum of $ 3,500.
On the contrary, if the gold falls below $ 3,300, look for low pressure that pushes the Xau/USD to the simple mobile average (SMA) of 50 days at $ 3,275, before the maximum of April 3 turned into support into $ 3,167.
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.
