- The price of gold is recovered after the headlines that Israel considers to attack Iran’s nuclear facilities.
- President Trump clashes with Republican members about the approval of his fiscal package plan in the US Congress.
- Technically, gold has left its adjusted range after exceeding $ 3,300.
Gold (Xau/USD) rises on Wednesday to $ 3,308 at the time of writing, driven by the concern that tensions in the Middle East can get out of control again and for US fiscal problems in the last operations on Tuesday, CNN reported that Israel is considering attacking nuclear sites in Iran. While the former president of the United States, Joe Biden, was able to change his mind to Israeli Prime Minister Benjamin Netanyahu, US president Donald Trump has seen how his diplomatic efforts fall apart, with the markets questioning whether Trump can still control Netanyahu.
In the US, President Trump faces setbacks at home, as well as the administration to obtain enough support to approve his fiscal bill in Congress. The frustration arose for Trump in Capitol Hill when talking with legislators who demanded to significantly increase the limit of the deduction of state and local taxes (PALT).
What moves the market today: waiting for confirmation of Trump or Netanyahu
- The safe refuge support for gold was driven by a CNN report indicating that Israel could be planning an attack on Iranian nuclear facilities. It is not clear if a final decision was made to carry out the attack, the report said. The markets will want to seek confirmation of US leaders or Israel.
- After the telephone call between the US president Trump and Russian President Vladimir Putin, the Vatican has proposed to host any event related to peace conversations between Ukraine and Russia.
- Financial Times reports that US legislators are pressing Northern Ireland to approve a American -owned gold mine that could use billions of pounds for the local economy, warning that delays in the project could move away foreign capital.
Technical analysis of gold price: loss of control
The recent headlines on the Middle East and the stagnation in the US Congress are another blow to President Trump and his credibility, and in a broader sense, the credibility of the US dollar and the US economy. Gold benefits from uncertainty, and could reach more than $ 3,350 if Israel confirms its plans.
On the positive side, the resistance R1 in 3,324 $ is the first level to take into account, since it is aligned with the maximum of May 12. The R2 resistance in 3,354 $ remains far from the R1 and could open the door for a return to $ 3.431, which were the peaks of April 21 and May 6 and 7.
A thick layer support emerges on the negative side in case the price of gold decline. On the negative side, the daily pivot stands at $ 3,263. Next, there is a pivot technical level at $ 3,245, and, just below, $ 3,231 such as Intradica S1.
Xau/USD: Daily graphic
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.
