- The price of gold reverses a drop in the Asian session to more than a minimum of three weeks, although it lacks continuation.
- The fears of a recession continue to weigh on the feeling of investors and benefit this raw material of safe refuge.
- The most aggressive rate cuts of the Fed weakens the USD and also support the Xau/USD pair.
The price of gold (Xau/USD) attracts some vendors near the support converted into $ 3.055 resistance and stops its intra-recovery from the area of ​​2,972-2.971 $, or a minimum of almost four weeks reached at the beginning of this Monday. Investors continue to get rid of their upward positions to cover losses of a broader collapse in global financial markets, which acts as a wind against precious metal. That said, a prolonged mass sale in the shares markets, triggered by the wide reciprocal tariffs announced last week by the US president, Donald Trump, offers some support to this safety refuge raw material.
Meanwhile, the data published today showed that the Popular Bank of China (PBOC) increased its state gold reserves for the fifth consecutive month. In addition, the appearance of new US dollar sales (USD), triggered by bets that an economic deceleration driven by tariffs could force the Federal Reserve (Fed) to soon resume its cycle of rates cuts, provides additional support for the price of gold that does not yield. This, together with the persistent geopolitical risks, justifies caution before positioning itself for an extension of the XAU/USD pair from the historical maximum achieved last week.
Daily summary of market movements: the price of gold receives support from the global flight to security; The bulls lack conviction
- The growing global commercial war continues to feed concerns about a worldwide economic recession and leads to a prolonged mass sale in shares markets worldwide. This, in turn, led the operators to liquidate their long positions around the price of gold and increase their liquidity to cover losses in other places.
- According to the data published on Monday, the Popular Bank of China (PBOC) added gold to its reservations for the fifth consecutive month in March. In fact, the holdings of the Popular Bank of China increased by 0.09 million Troy ounces last month in the midst of an increase in global trade and geopolitical agitation.
- The president of the USA, Donald Trump, imposed reciprocal tariffs of at least 10% to all imported goods at the end of last Wednesday, with China facing 54% taxes under this new regime. In response, the China Ministry of Commerce announced on Friday that additional tariffs of 34% will be imposed on all US imports.
- Meanwhile, US Secretary of Commerce, Howard Lutnick, confirmed on Sunday that tariffs will not be postponed and that the policy will remain in force for days and weeks. In addition, Trump declared that there will be no agreement with China unless the trade deficit is resolved.
- The US dollar struggles to capitalize on the modest recovery movement of Friday from a minimum of several months that followed the publication of the expected report of non -agricultural payroll (NFP) of the USA. In fact, the employment data, very observed, showed that the economy added 228K jobs in March compared to 117K before.
- Meanwhile, the president of the Federal Reserve (FED), Jerome Powell, said inflation is closer to the goal but still slightly high. Powell added that Trump’s tariffs could have a strong inflationary impact and that Fed’s work is to prevent temporary price increases becoming persistent inflation.
- However, investors are still valuing the possibility that the US Central Bank resumes its rate cuts cycle in June and also reduces indebtedness costs at least four times this year. This, together with low risk, maintains the performance of the US government bonus 10 years below 4.0%.
- This, in turn, slows the USD’s bullies to perform aggressive bets and attends the yellow metal that does not yield to register a modest intradic rebound from a minimum of almost four weeks reached during the Asian session on Monday. However, the lack of continuation justifies caution for the bullies.
The price of gold needs to exceed the support converted into resistance of 3.055 $ so that the bulls recover the short -term control
From a technical perspective, the strong fall of last week from the historical maximum stops before the 61.8% fibonacci setback level of the strong ascending movement from February to April. However, the subsequent movement staggers near the horizontal breakdown of $ 3.055, now converted into resistance. The latter should now act as a key point for Intradia operators, above which the price of gold could rise to the 3,080 $ region on the way to the round figure of $ 3,100.
On the other hand, the psychological level of $ 3,000, which coincides with the 50%recoil level, now seems to protect the immediate fall before the area of ​​2,972-2.971 $, or the minimum of several weeks reached at the beginning of this Monday. This is closely followed by the Simple Mobile (SMA) average of 50 days, around the area of ​​2,946 $, which is broken decisively, the short -term bias could be changed in favor of the bassists and pave the path for a new depreciation movement.
Fed Faqs
The monetary policy of the United States is directed by the Federal Reserve (FED). The Fed has two mandates: to achieve prices stability and promote full employment. Its main tool to achieve these objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the objective of 2% set by the Federal Reserve, it rises interest rates, increasing the costs of loans throughout the economy. This translates into a strengthening of the US dollar (USD), since it makes the United States a more attractive place for international investors to place their money. When inflation falls below 2% or the unemployment rate is too high, the Federal Reserve can lower interest rates to foster indebtedness, which weighs on the green ticket.
The Federal Reserve (FED) celebrates eight meetings per year, in which the Federal Open Market Committee (FOMC) evaluates the economic situation and makes monetary policy decisions. The FOMC is made up of twelve officials of the Federal Reserve: the seven members of the Council of Governors, the president of the Bank of the Federal Reserve of New York and four of the eleven presidents of the regional banks of the Reserve, who exercise their positions for a year in a rotary form.
In extreme situations, the Federal Reserve can resort to a policy called Quantitative Easing (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non -standard policy measure used during crises or when inflation is extremely low. It was the weapon chosen by the Fed during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy high quality bonds of financial institutions. The one usually weakens the US dollar.
The quantitative hardening (QT) is the inverse process to the QE, for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the bonds that it has in portfolio that they expire, to buy new bonds. It is usually positive for the value of the US dollar.
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.
