- The price of gold rises for the second consecutive day in the midst of a combination of support factors.
- Commercial nerves act as a tail wind for the XAU/USD torque of secure refuge due to a weaker USD.
- The fall in the yields of the American bonds and the bets for fed rate cuts further benefit the yellow metal without performance.
The price of gold (Xau/USD) maintains a positive bias for the second consecutive day on Thursday, although the lack of follow -up purchases advises caution before positioning itself for an extension of the night rebound from a minimum of a week and a half. Operators reduced bets on the number of interest rate cuts by the Federal Reserve (FED) this year after the publication of the encouraging US employment data last Thursday. In addition, the minutes of the June FOMC meeting published on Wednesday revealed that only a couple of officials considered that interest rates could lower as soon as this month amid concerns about inflation due to US tariffs. This acts as a tail wind for the US dollar (USD) and as a wind against yellow metal without performance.
However, operators seem convinced that Fed will further reduce indebted costs by the end of this year. This, together with a strong demand in the 10 -year government debt auction on Wednesday, leads to a greater fall in the yields of the US Treasury bonds and keeps the USD’s bulls on the defensive USD. Apart from this, the concerns about the possible economic repercussions of the commercial tariffs of the US president, Donald Trump, continue to support a tone of slight demand around the price of gold refuge gold. The operators now expect the publication of the weekly data of unemployment applications in the US and the Fed speeches to obtain a new short -term impulse.
What moves the market today: gold price up
- The US president Donald Trump issued tariff notices to eight minor business partners on Wednesday and said there will be no extensions for countries that receive letters. In addition, Trump emphasized that any retaliation tax will be added to the US existing tariffs.
- Adding to this, Trump announced that the 50% tariff on copper imports will enter into force on August 1. This adds a layer of uncertainty in the markets and turns out to be a key factor that drives some safe refuge flows towards the price of gold on Thursday.
- The minutes of the June 17-18 policy meeting revealed that the majority of policies responsible are still concerned about the risk of increasing inflationary pressure due to Trump’s aggressive commercial policies. In addition, some policy managers felt that no feat cut would be necessary.
- However, most participants expected rates cuts would be appropriate later this year and that any pricing shock for tariffs would be temporary or modest. This contributed to the fall in the yields of the US Treasury bonds, triggered by a strong government debt auction at 10 years.
- The US dollar extends its setback from a maximum of two weeks per second consecutive day and turns out to be another factor that benefits the Xau/USD couple. The operators now expect the publication of weekly unemployment applications in the US and the speeches of Fed officials to obtain a new impulse.
The price of gold seems vulnerable while below the key obstacle of the 100 hours in the 4 -hour graphics
From a technical perspective, the simple mobile average (SMA) of 100 periods in the 4-hour graph, currently located near the 3,335 $ region, could limit any subsequent movement of the price of gold. This is followed by the supply zone of 3,358-3.360 $, which, if it is exceeded, could trig 3,400 $.
On the contrary, the weakness below the $ 3,300 mark would expose the minimum of the night oscillation, around the 3,283-3,282 $ region. Some follow -up sales would make the Gold price Be vulnerable to accelerating the fall towards a new test of the minimum monthly oscillation of July, around the 3,248-3,247 $ region.
GOLD – FREQUENT QUESTIONS
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.
