- The price of gold continues to attract safe refuge flows on Monday in the midst of uncertainties related to trade.
- The US dollar sank to a minimum of two years amid recession fears that further benefit from the Xau/USD torque.
- The overcompra conditions in the daily chart justify the caution before making new bullish bets.
The price of gold (Xau/USD) recovers a strong positive traction after the modest fall on Friday and rises to a new historical maximum, closer to the 3,400 mark at the beginning of a new week. Concerns for the commercial war continue to feed the fears of recession and weigh on the feeling of investors, which is evident in a weaker tone in the variable income markets and directs flows to the traditional precious metal of safe refuge. Apart from this, the prevalent sales bias of the US dollar (USD) is considered another factor that benefits the merchandise.
The round trips of the US President Donald Trump have affected the confidence of investors in the US economy. Its part, they seem not to be affected by the overextended conditions in the daily chart, which suggests that the path of less resistance for the Xau/USD is upwards.
What moves the market today: the price of gold remains well supported by the global career towards security in the midst of growing commercial tensions
- Investors are still concerned about the possible economic repercussions of the commercial rates of US President Donald Trump and the rapid escalation of the commercial war between the US and China, pushing the price of the gold of secure refuge to a new historical maximum on Monday. In fact, Trump recently imposed rates of up to 145% on certain Chinese products, with some tariffs allegedly reaching 245%. In retaliation, China has imposed 125% rates on US products.
- Meanwhile, Trump’s aggressive commercial policies could harm the world commercial order and trigger a recession in the US, in turn, drags the US dollar at its lowest level since April 2022 and further benefits the precious metal. The USD bulls ignored the hard line comments of the president of the Federal Reserve, Jerome Powell, saying that the Central Bank is well positioned to wait more clarity before making changes in the policy position.
- In addition, market participants are still valuing the possibility that the Fed resumes their cycle of feat cuts in June and reduces indebtedness costs at a complete percentage point by the end of this year. This turns out to be another factor that contributes to direct flows to the non -generating yellow metal, in the midst of thin negotiation conditions due to Easter Monday’s holiday and despite the overcompra conditions in the daily chart.
- Iran and the US agreed on Saturday to initiate discussions at expert level to design a framework for a possible nuclear agreement. In addition, the high fire of Russian President Vladimir Putin in Ukraine on Saturday aroused hopes that tensions could be broken down. However, this helps to increase the confidence of investors OA to affect the demand for traditional safe shelter assets, supporting the prospects for greater appreciation of the Xau/USD couple.
- There are no relevant economic data scheduled for publication in the US on Monday, although a scheduled speech by Chicago’s president, Austen Goolsbee, could influence the USD. Apart from this, trade -related developments should provide a momentum to the merchandise. Market attention will then be transferred to the publication of the preliminary PMIS on Wednesday, which should offer a new perspective on global economic health.
The price of gold needs to consolidate before the next climb in the middle of an overlying daily RSI; The bullish potential seems intact
From a technical perspective, the incessant purchase validates the short -term positive perspective for the price of gold. However, the relative force index (RSI) is maintained well above the 70 brand and could force the upward operators to pause. Therefore, it will be prudent to expect some short -term consolidation or a modest setback before positioning itself for an extension of the upward trend of several months.
Meanwhile, any corrective fall could find some support near the 3,350 $ zone. This is followed by the minimum of the Asian session, around the region of 3,329-3.328, below which the price of gold could accelerate the fall towards the round figure of $ 3,300 en route to the minimum of Friday, around the area of 3,284 $. The latter should act as a key point, which if it breaks decisively could pave the path for deeper losses.
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.
