- The price of gold flirts with the psychological level of $ 3,300 while markets expect information on tariffs and commercial negotiations.
- FOMC minutes are at the center of attention while investors look for signs of when the Fed will cut the fees.
- The Xau/USD remains in conflict above $ 3,300 after falling to a minimum of one week in the European session.
Gold (Xau/USD) is extending its decline on Wednesday for the second consecutive day, since the US dollar (USD) and US treasure yields are strengthened before the publication of the minutes of the meeting of the Federal Open Market Committee (FOMC).
The US dollar index (DXY) is rising to its highest level in two weeks, pushing Xau/USD below $ 3,300 at the time of writing.
It is expected that the next publication of the FOMC minutes of the June meeting will throw light on the internal debate of the Fed on the path of monetary policy.
In June, the Central Bank chose to maintain its reference interest rate by 4.25% to 4.50%, citing a resistant labor market and persistent inflationary pressures.
The report of Non -agricultural payrolls (NFP) last week reinforced that perspectiveshowing a continuous strength in employment and reducing the expectations of a short -term rate cut. As a result, the yields have consolidated throughout the curve, strengthening even more to the USD and weighing over gold.
Gold typically shares an inverse relationship with the US dollar and interest rates. When the yields rise, the assets that generate interest become more attractive compared to gold, which does not offer performance. This dynamic has continued to press the precious metal in recent sessions.
Commercial prospects and tariff extensions decrease the short -term attractiveness of gold
The letters that delineate the reciprocal tariff rates that the Trump administration intends to impose on imports to the USA. They continue to be sent to the commercial partners of the world’s largest economy.
This has revived concerns about the possible economic implications of the increase in tariffs.
The last news that the European Union (EU) and the USA (USA) They are advancing in commercial negotiations have provided additional support to the dollar.
However, with the new rates That it is expected to enter into force as of August, the extension of three weeks has increased hopes that more commercial agreements between the US and its main counterparts can be announced. This has weakened the short -term attractiveness of gold.
What moves the market today: gold depends on the perspective of Fed and commercial policy
- According to the CME Fedwatch tool, markets are valuing a 62.9% probability for a 25 basic points rate cut in September. Until now this year, the Fed has maintained interest rates within the range of 4.25%-4.50%, supported by a resistant labor market.
- Meanwhile, President Trump continues to criticize the president of the FED, Jerome Powell. On Tuesday, Trump asked for his “immediate resignation.” In Truth Social, Trump declared: “The rates should have cut months ago. The only reason why they are not because Powell does not want me to win.” These comments reflect Trump’s long data frustration with Powell, which began during his first term and has intensified as monetary policy remains adjusted.
- On tariffs, the Trump administration has insinuated to impose a 50% tariff rate on copper imports to the US and a possible 200% tariff on pharmaceutical products.
- At a cabinet meeting on Tuesday, Trump reiterated that there will be no more extensions to the new tariff term on August 1. “Everyone has to pay. And the incentive is that they have the right to trade in the United States.” Trump wrote in Truth Social that “tariffs will begin to be paid on August 1, 2025. There have been no changes on this date, and there will be no changes.”
- On Monday, 14 cards were sent to countries, including Japan and South Korea, delineating the new tariff rate. On Tuesday, US Secretary of Commerce, Howard Lutnick, told CNBC that 15 to 20 additional letters were scheduled to be sent to global leaders before Wednesday.
- Trump also threatened Brics with an additional 10%tariff. BRICS nations collaborate on various topics, including trade, investment, finance and sustainable development. They seek to increase their influence on global economic and political affairs. The block also celebrates annual summits to discuss and coordinate strategies for mutual support and growth.
Technical Gold Analysis: The Xau/USD remains above $ 3,300
Gold (Xau/USD) is under renewed pressure on Wednesday, with the price threatening the lower limit of a symmetrical triangle pattern.
The daily candle is quoting just below the Fibonacci recoil level of 38.2% in $ 3,292 of the rebound in April, which has served as a key level of short -term support in recent weeks.
Daily Gold Graph (Xau/USD)
A sustained movement below this level could expose to Gold For more losses, with an objective at the FIBO level of 50% in $ 3,228, followed by $ 3,164.
On the positive side, the resistance is aligned in the single mobile average (SMA) of 50 days at 3,321 $ and the SMA of 20 days in $ 3,345.
The 23.6% setback level is providing an additional resistance barrier at $ 3,372, with an upward movement opening the door for the round number of 3,400 $.
The Relative Force Index (RSI) remains about 44, reinforcing the appearance of bassing momentum.
The failure of the metal to stay above its mobile socks and the vertex of the triangle favor the continuation down, unless the bulls can gain traction convincingly above $ 3,345.
Feeling Risk – Frequently Questions
In the world of financial jargon, the two terms “appetite for risk (Risk-on)” and “risk aversion (risk-off)” refers to the level of risk that investors are willing to support during the reference period. In a “Risk-on” market, investors are optimistic about the future and are more willing to buy risk assets. In a “Risk-Off” market, investors begin to “go to the safe” because they are concerned about the future and, therefore, buy less risky assets that are more certain of providing profitability, even if it is relatively modest.
Normally, during periods of “appetite for risk”, stock markets rise, and most raw materials – except gold – are also revalued, since they benefit from positive growth prospects. The currencies of countries that are large exporters of raw materials are strengthened due to the increase in demand, and cryptocurrencies rise. In a market of “risk aversion”, the bonds go up -especially the main bonds of the state -, the gold shines and the refuge currencies such as the Japanese yen, the Swiss Franco and the US dollar benefit.
The Australian dollar (Aud), the Canadian dollar (CAD), the New Zealand dollar (NZD) and the minor currencies, such as the ruble (Rub) and the South African Rand (Tsar), tend to rise in the markets in which there is “appetite for risk.” This is because the economies of these currencies depend largely on exports of raw materials for their growth, and these tend to rise in price during periods of “appetite for risk.” This is because investors foresee a greater demand for raw materials in the future due to the increase in economic activity.
The main currencies that tend to rise during the periods of “risk aversion” are the US dollar (USD), the Japanese yen (JPY) and the Swiss Franco (CHF). The dollar, because it is the world reserve currency and because in times of crisis investors buy American public debt, which is considered safe because it is unlikely that the world’s largest economy between in suspension of payments. The Yen, for the increase in the demand for Japanese state bonds, since a great proportion is in the hands of national investors who probably do not get rid of them, not even in a crisis. The Swiss Franco, because the strict Swiss bank legislation offers investors greater protection of capital.
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.
