- Gold approaches its historical maximum, rises in the midst of volatile statements of American politics.
- Trump’s comments at the Wef soften Chinese tariffs and advocate lower rates, affecting the dollar.
- The US dollar index falls 0.62% to 107.44, weakening the dollar and improving the attractiveness of gold as coverage.
The price of gold extended its weekly profits, ready to challenge the historical maximum of 2,790 $ sooner rather than later. The comments of the president of the United States (USA), Donald Trump, could be the catalyst that pushes the highest yellow metal, although he surprised traders by refraining from imposing tariffs on Chinese products. The XAU/USD quotes at $ 2,772, rising 0.60%.
The mood of the market changed slightly to negative despite the fact that Trump has softened the rhetoric of commercial policy against allies and adversaries. Friday’s economic data on Friday hinted that the manufacturing activity improved in December, according to S&P global, while the feeling of the consumer deteriorated, the final survey of January of the University of Michigan (UOM) reported.
However, Trump’s hard rhetoric is not limited to commercial deficit. In the World Economic Forum (WEF) he added that he would demand lower interest rates.
After his comments, the dollar fell and remains defensive, as seen in the American dollar index (DXY), which tracks the value of the US currency in front of a basket of six currencies. Drops 0.62% to 107.44.
The dollar is ready to finish the week with 1.77% losses in the first week of the US president, Donald Trump, in the position.
Next week, the US Economic Agend Fed preferred, the Personal Consumption Expenditure Index (PCE).
Daily market summary: The price of gold rises above $ 2,770 with solid US data.
- The price of gold rose ignoring the progress of real yields. Measured by the protected values against 10 -year Treasury inflation (Tips), the yield is 2.23%, rising a basic point and a half (PB).
- The 10 -year Treasury bonus yield from the US drops two PB during the day to 4,625%.
- The US M&P manufacturing PMI for December improved from 49.4 to 50.1, above the estimates of 49.6. Meanwhile, the PMI of Services fell from 56.8 to 52.8, not reaching the forecasts of 56.5
- The feeling of the final consumer of the University of Michigan for January expanded to 71.1, below the estimates of 73.2 and the preliminary reading of 74.0.
- The sales of existing housing in December rose 2.2% MOM, from 4.15 million to 4.24 million.
- Market participants are valuing almost equal probabilities that the FED cuts the rates twice by the end of 2025, with the first reduction occurring in June.
Xau/USD technical perspective: Gold shoots above $ 2,770 while bulls point to ATH
The gold price rally is ready to spread, but traders must exceed the historical maximum of 2,790 $. Despite this, the formation of a bullish candle with a small upper shadow indicates that traders are not accepting higher prices. This is further confirmed by the relative force index (RSI), which has become overcompared.
The Xau/USD must exceed the historical maximum (AH) in $ 2,790 for a bullish continuation. Once clear, the next resistance would be $ 2,800, followed by key psychological levels set out at $ 2,850 and $ 2,900.
On the contrary, if the bears drag the bullion prices below the figure of 2,750 $, the simple mobile stockings (SMA) of 50 and 100 days emerge as support levels, each at 2,656 $ and 2,653 $. If they are exceeded, the 200 -day SMA is found below $ 2,520.
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 weaker 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.
