- The price of gold continues to attract safe refuge flows in the midst of growing commercial tensions.
- Fed fees cuts expectations keep the USD bulls on the defensive and also offer support.
- The operators now wait for the US PCE price index in search of a significant impulse.
The price of gold (Xau/USD) attracts buyers of continuation for the second consecutive day and rises to a new historical maximum, around the area of ​​3,077-3.078 $ during the Asian session on Friday. The feeling of global risk is affected in reaction to the automotive tariffs announced by the US president, Donald Trump, Wednesday. In addition, the uncertainty about the impending Trump reciprocal tariffs next week and its effect on the global economy weighs on the feeling of investors. This, in turn, is considered a key factor that continues to drive refuge flows to precious metal.
Meanwhile, the last climbing in the commercial war feeds concerns that Trump’s imminent reciprocal tariffs affect US growth and force the Federal Reserve (Fed) to soon resume their cycle of feat cuts. This keeps the US dollar (USD) bundles on the defensive and turns out to be another factor that supports the price of gold without yield. However, Xau/USD bulls could pause breath in the midst of slightly overcompricated conditions and before the US Personal Consumption Expenditure Index (PCE), which should offer clues on the path of fees of Fed fees.
What moves the market today: the price of gold is still well supported by concerns about Trump’s tariffs
- The US president, Donald Trump, announced on Wednesday a 25% tariff on imported cars and light trucks that will enter into force on April 3, expanding the global commercial war and moderating the appetite of investors for higher risk assets.
- This adds to a 25% tariff on steel and aluminum, and the imminent announcement of Trump’s reciprocal tariffs next week, which feeds uncertainty and raises the price of gold sure shelter to a new historical maximum.
- Meanwhile, markets are now valuing the possibility that the Federal Reserve (FED) again reduces the indebtedness costs at its June policy meeting amid concerns about the US economic deceleration promoted by tariffs.
- The US dollar bundles seem to be quite indifferent to the macroeconomic data of the US better than expected on Thursday and the mostly aggressive comments of Fed officials, providing additional support to the Xau/USD pair.
- The US Economic Analysis Office (BEA) reported that the Gross Domestic Product (GDP) of the US grew at an annualized pace of 2.4% in the fourth quarter, above the previous estimate and the expected reading of 2.3%
- In addition, the US Labor Department said the number of American citizens who submitted new unemployment insurance requests decreased to 224K compared to the total revised of 225K from the previous week.
- Richmond’s president Tom Barkin said the current moderately restrictive monetary policy is suitable for an environment with an abnormal amount of uncertainty and rapid changes in US government policy.
- In addition, the president of the Boston Fed, Susan Collins, warned that the aggressive commercial policies of the Trump administration will increase inflation in the US, but it is not clear how persistent that rising pressure will be.
- Therefore, the approach remains focused on the publication of the US Personal Consumption Expenditure Index (PCE), or the Fed’s favorite inflation indicator, which will be published later during the early North American session.
- Investors will examine crucial data to evaluate the trajectory of future rate cuts, which will influence the USD price dynamics and provide a new boost to yellow metal without performance.
The price of gold needs to consolidate before the next rise movement in the middle of a slightly overcompared daily RSI
From a technical perspective, the upward resilience of this week near the psychological threshold of $ 3,000 and the subsequent upward movement suggest that the road of lower resistance for the price of gold remains up. That said, the Relative Force Index (RSI) in the daily chart already shows overbill conditions and justifies a certain caution. Therefore, it would be prudent to expect some short -term consolidation or a modest setback before positioning itself for an extension of the well -established bullish trend that has been observed during the last three months approximately.
Meanwhile, any corrective drop now seems to attract some buyers at lower levels near the horizontal zone of 3,050-3,048 $. This should help limit the fall in the price of gold near the region of 3,036-3.035 $. However, a sustained rupture below the latter could cause some technical sales and drag the Xau/USD below the intermediate support of 3,020-3,019 $, back to the threshold of $ 3,000. This level should act as a key point for short -term operators, which if it breaks decisively, should pave the way for a significant fall in the short term.
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.
