- The price of gold remains stagnant below $ 3,340 during the European negotiation session on Monday.
- Relief in Europe after Trump announced a delay in EU tariffs until July 9.
- The concerns about US debt are in the background, limiting the decline of precious metal.
The price of gold (Xau/USD) falls on Monday to $ 3,333 at the time of writing, while US markets are closed due to the fallen day holiday. The small correction occurs after the US president (USA) Donald Trump issued a statement in Truth Social in which he would extend until July 9 the deadline for the European Union (EU) to face 50%tariffs. The decision was made after a call between Trump and the president of the European Commission, Ursula von der Leyen, on Sunday, and should help the EU negotiate a commercial agreement with the Trump administration.
Although this risk of risk seems tempting to join, this does not mean that the precious metal rally is over. A softer posture about trade weakens the demand for safe refuge for gold, but the attractiveness of metal security is still strong in increasing concerns about the fiscal position of the US government. Investors are still concerned that Trump’s tax bill, which passed by the Chamber last week and will be discussed in the Senate, increase even more both the deficit and US debt.
What moves the market today: US credit reduction = Improvement of the price of gold
- Citigroup Inc. returned to raise its three -month price objective for gold at 3,500/ounce due to concerns related to tariffs, high geopolitical risks and solid economic growth in China and India. “The demand for gold is working at full speed,” Citi analysts said in a note, Bloomberg reports.
- The US president Trump announced Sunday that his plans to impose 50% tariffs on the EU would be delayed until July 9 to allow both parties to negotiate an agreement. The American leader had threatened Friday to impose tariffs of 50% higher than expected against the block, while warning Apple Inc. that would be subject to 25% tariffs if it does not manufacture its iPhones in the US, Bloomberg reports.
- Josh Gilbert, market analyst in Etoro, warned that these delays are not bringing structural changes to Trump’s tariff policy. “Pauses are good for now, but during this time, we need to see more agreements to confirm Trump’s most negotiable approach,” said Bloomberg.
- The Vietnam Prime Minister, Pham Minh Chinh, has asked the Central Bank of the country, to the Ministry of Finance and the relevant agencies that study the creation of a regulated gold stock market to allow transparent public trade and prevent smuggling and manipulation, according to a statement on the government’s website, reports Bloomberg.
- The US dollar also falls on Monday, extending the losses of Friday, since the enthusiasm seems to have decreased by the world reserve currency this year in the midst of increasing tax concerns in the US CFTC reported on Friday, reports Reuters.
Technical analysis of the price of gold: demand remains solid
Gold steps back while investors flee to risk assets after the agreement between Trump and von der Leyen to continue negotiating on trade. However, the delay is only minor, just one month, and negotiating a commercial agreement between the two blocks is almost impossible to make in such a short period of time. Therefore, this news should be seen as short injections of relief within a general narrative that is still favorable for Gold due to high uncertainty.
On the positive side, resistance R1 at $ 3,386 is the first level to take into account as resistance. The R2 resistance at $ 3,415 remains not far and could open the door for a return to the round level of $ 3,440 and potentially an advance towards new historical maximums at $ 3,500.
On the other hand, a thick layer support arises in case the Gold price decline Downwards, the S1 daily support is $ 3,307, protecting the important $ 3,300 figure. An intermediate support could come from S2 support at $ 3,258. Below, there is a pivotal technical level at $ 3,245, which converges approximately with S2 support in 3,240.
Xau/USD: Daily graphic
US interest rates
Financial institutions charge interest rates on loans to borrowers and pay them as interest to savers and depositors. They influence the basic types of interest, which are set by central banks based on the evolution of the economy. Normally, central banks have the mandate to guarantee the stability of prices, which in most cases means setting as an objective an underlying inflation rate around 2%.
If inflation falls below the objective, the Central Bank can cut the basic types of interest, in order to stimulate credit and boost the economy. If inflation increases substantially above 2%, the Central Bank usually rises the interest rates of basic loans to try to reduce inflation.
In general, higher interest rates contribute to reinforce the currency of a country, since they make it a more attractive place for world investors to park their money.
The highest interest rates influence the price of gold because they increase the opportunity cost of maintaining gold instead of investing in an asset that accrues interest or depositing effective in the bank.
If interest rates are high, the price of the US dollar (USD) usually rises and, as gold quotes in dollars, the price of low gold.
The federal funds rate is the type to a day that US banks lend each other. It is the official interest rate that the Federal Reserve usually sets at its FOMC meetings. It is set at a fork, for example 4.75%-5.00%, although the upper limit (in this case 5.00%) is the aforementioned figure.
Market expectations on the interest rate of the Federal Reserve funds are followed by the Fedwatch of the CME tool, which determines the behavior of many financial markets in the forecast of future monetary policy decisions of the Federal Reserve.
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.
