- The price of gold falls to a minimum of several days on Monday in the middle of a modest strength of the USD.
- The expectations of fees of fees of the Fed and the fiscal concerns of the US should act as a wind against the USD.
- Geopolitical risks could offer even more support to the precious metal of safe refuge.
The price of gold (Xau/USD) attracts new sellers at the beginning of a new week and slides towards the neighborhood of $ 3,300, or a minimum of several days during the Asian session. The intradication fall is sponsored by a modest fortress of the US dollar (USD), which tends to undermine the demand of the commodity called in USD, although a combination of factors could help limit deeper losses. Investors are still concerned that the massive tax and expenses drafts of US President Donald Trump worsen the long -term debt problems in America. This, together with the expectations that the Federal Reserve (FED) resume its cycle of feat cuts in the near future, should keep the USD at bay and support the yellow metal that does not offer yields.
Meanwhile, the new Israeli attacks in Yemen, after almost a month, and uncertainty about Trump’s erratic commercial policies weigh on the feeling of investors. This is evident in a generally weaker tone around stock markets, which could stop the operators of opening aggressive bearish positions around the price of safe refuge gold in the absence of any relevant macroeconomic publication of the United States on Monday. Market participants now expect the minutes of the FOMC meeting for clues about the FED policy perspective and the path of feat cuts. This, in turn, will play a key role in influencing the USD price dynamics. Apart from this, geopolitical and trade developments should contribute to provide a momentum to the Xau/USD torque.
Daily summary of market movements: The price of gold is pressed by the modest strength of the USD
- The US dollar begins the new week with a slightly positive tone and weighs on the price of gold, although the downward potential seems limited in the midst of a combination of support factors.
- The ‘One Big Beautiful Bill’ by US President Donald Trump is now a law and is expected to add 3.4 billion dollars to national debt during the next decade, worsening the long -term debt problem.
- This occurs in the midst of concerns about the possible economic repercussions of Trump’s reciprocal tariffs and the moderate expectations of the Federal Reserve, which should keep any significant strength of the USD at bay.
- Trump said on his social networks early on Monday that the letters of US tariffs and/or agreements with several countries around the world will be delivered from 12:00 pm on July 7.
- Trump continued with a warning, stating that any country that aligns with BRICS anti -American policies will be taxed with an additional 10% tariff and there will be no exceptions to this policy.
- Operators are currently valuing more than 70% probability that the US Central Bank reduces indebtedness costs in September and delivers at least two rate cuts of 25 basic points by the end of the year.
- The Israeli army carried out intense attacks on huti objectives in three ports and an energy plant in Yemen early this Monday in response to repeated attacks of the group aligned with Iran against Israel.
- This maintains the geopolitical risks at stake and should offer some support to the precious metal of safe refuge. The operators now expect the publication of the FOMC minutes on Wednesday for a new momentum.
The price of gold could accelerate the fall once the level of $ 3,300 is decisively broken
Recent repeated failures to build on the impulse beyond the simple mobile average (SMA) of 100 periods in the 4 -hour graph and the subsequent fall below the level of $ 3,300 will be seen as a new trigger for the bassists of the Xau/USD. Since the oscillators in the daily chart have begun to gain negative traction, the price of gold could accelerate the fall towards the following relevant support near the horizontal area of ​​$ 3,270 en route to the region of 3,248-3.248 $.
On the other hand, the 324-3,325 region now seems to act as an immediate obstacle before the 3,342-3.343 $ zone. Some follow-up purchases, which lead to a greater strength beyond the area of ​​3,352-3.355 $, could provide a good impulse to the price of gold and allow the bullies to aim to recover the round figure of $ 3,400.
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.
