- The price of gold moves up in the first Asian session on Wednesday.
- Concerns about the commercial war between investors increase safe refuge flows, benefiting the price of gold.
- Investors are preparing for sales of new housing in January and Fed’s comments later on Wednesday.
The price of gold (Xau/USD) recovers part of the land lost after reaching a minimum of one week in the previous session. Uncertainty and continuous fears of instability around the tariff plans of US President Donald Trump provide some support to the yellow metal, a traditional refuge asset.
However, analysts believe that Trump’s plans to increase tariff High for longer. This, in turn, could limit the bullish potential of the precious metal, since the highest interest rates tarnish the attractiveness of gold without performance.
The sales of new US housing for January will be published later on Wednesday. In addition, Fed officials, including Raphael Bostic and Thomas Barkin, are scheduled to speak the same day. On Friday, all eyes will be placed in the publication of the US Personal Consumption Expenditure Index (PCE) for January.
The price of gold gains traction as the fears of commercial war persist
- Trump signed another executive order on Tuesday night, pointing to the US Department of Commerce to launch an official “research” in copper markets.
- Trump declared on Monday night that tariffs on Canadian and Mexican imports were “in time and in the schedule” despite the efforts of the countries to reinforce border security and stop the flow of fentanyl towards the USA before of a deadline of March 4, according to Reuters,
- Consumer confidence in the US fell more than ever since August 2021, decreasing to 98.3 in February compared to 105.3 above, according to the Board Conference.
- Richmond’s president of the Fed, Thomas Barkin, said Tuesday night that he will continue an approach to wait and see regarding the interest rates policy of the Central Bank until it is clear that inflation is returning to the goal of 2% of the Fed.
- The president of the Fed of Dallas, Lorie Logan, declared that she would be appropriate in the medium term that the Fed bought more short -term values ​​than in the long term so that her portfolio can more quickly reflect the composition of the issuance of the treasure, according to Bloomberg.
The price of gold maintains the bullish tone despite the short -term consolidation
The price of gold rises in the day. In the short term, precious metal remains limited in a narrow negotiation range. However, the upward perspective of the price of gold remains intact in the daily chart, with the price remaining above the 100 -day exponential mobile average (EMA). In addition, the 14 -day relative force (RSI) index is above the midline about 64.0, indicating that the lower resistance path is upward.
The historical maximum of $ 2,957 seems to be a hard obstacle to gold bullies. An upward breakdown from the aforementioned level could trigger a movement towards the next upward levels by $ 2,980, the upper limit of the Bollinger band, en route to the psychological level of $ 3,000.
In the bearish case, the minimum of February 25 in 2,888 $ acts as an initial support level for the yellow metal. Extended losses could pave the way to $ 2,795, the lower limit of the Bollinger band. The key containment level to observe is $ 2,718, the 100 -day EMA.
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.
