- The price of gold attracts some sellers intradia in the midst of a modest rebound of the USD from a minimum of several weeks.
- Fed rate cuts bets and US fiscal concerns should limit any additional USD appreciation.
- The increase in geopolitical tensions and trade -related uncertainties should support the Xau/USD torque.
The price of gold (Xau/usd) maintains its negative bias during the Asian session on Tuesday, although it lacks bassist conviction. A modest rebound of the US dollar (USD), along with a generally positive risk tone, triggers the intradication of intradia from a maximum of three weeks. However, a combination of factors is stopping the operators to carry out aggressive bearish bets around merchandise and helps limit deeper losses.
Investors remain in tension amid uncertainties related to trade, growing geopolitical tensions and concerns about the deterioration of US fiscal condition. In addition, bets that the Federal Reserve (Fed) will reduce the costs of indebtedness again this year should keep any significant assessment of the USD at bay and offer some support for the price of gold without performance. Operators are now pending US job offers data to obtain a new impulse.
What moves the market today: the bulls of the price of gold remain on the margin in the middle of a modest strength of the USD and a positive risk tone
- The US dollar bounces from a minimum of six weeks and causes some profits around the price of gold on Tuesday, after the upward movement of the previous day. The majority of Asian Variable Income Markets took positive signals of the strongest closure of the previous night on Wall Street and exerted additional pressure on the precious metal of safe refuge.
- However, investors remained largely in tension after the increase in commercial tensions between the US and China and geopolitical risks. The president of the United States, Donald Trump, lashed out at China during the weekend and accused the latter of violating a preliminary agreement on tariffs, reviving the fears of a commercial war between the two largest economies in the world.
- Last week, Trump announced that he will double tariffs on steel imports from 25% to 50%. Meanwhile, it is reported that the Trump administration is urging countries to present their most favorable commercial proposals for Wednesday in an effort to accelerate discussions before reciprocal tariffs enter into force on July 8.
- A second round of direct peace conversations between the delegations of Ukraine and Russia in Istanbul on Monday ended without great advance. In addition, Ukrainian President Volodymyr Zelenskyy said that surprise drones attacks during the weekend were a success and will continue if Russia does not stop their offensive.
- The events have increased geopolitical risks, which could continue to weigh in the feeling of investors and offer some support to the Xau/USD of safe refuge. In addition, bets for at least two cuts of 25 basic points in interest rates by the Federal Reserve in 2025 should limit losses to yellow metal without performance.
- The comments of several FED officials in recent days have contributed some clarity to the perspectives of interest rate cuts in 2025. In fact, the governor of the Fed, Christopher Waller, said Monday that the feat cuts remain possible later this year, even with the Trump administration tariffs that probably temporarily increase the pressures on prices.
- In addition, the president of the Fed of Chicago, Austan Goolsbee, said that interest rates can decrease within 12 to 18 months. In contrast, the president of the Fed of Dallas, Lorie Logan, adopted a cautious tone and said that the policy is well positioned to wait and be patient, and the risk is that the higher short -term inflation expectations are rooted.
- However, investors seem convinced that the Fed will remain in their relaxation bias in signals of greater relief of inflationary pressure in the US. In addition, concerns about the fiscal health of the USA could rekindle the issue of “selling America”, which, in turn, justifies the caution for the USD bullies and should benefit the merchandise.
- The operators now expect the publication of the US Jolts employment offers data, which, together with the speeches of influential members of the FOMC, will boost the USD and the Xau/USD. However, the approach will continue in the details of the US monthly employment, or the Non -Agricultural Payroll (NFP) report on Friday.
The technical configuration of gold price supports the possibility of some backward purchases below the resistance turned into a support of $ 3,355
From a technical perspective, the night break through the obstacle of $ 3,324-3,326 and a subsequent fortress beyond the area of ​​$ 3,355 was considered a key trigger for the bundles of the XAU/USD. In addition, oscillators in daily/hour graphics remain comfortably in positive territory and suggest that the road of lower resistance for the price of gold is upwards. Therefore, any subsequent sliding below the $ 3,355 area could be seen as a purchase opportunity and remain limited near the support converted into resistance of $ 3,326-3,324. However, some continuation sales could make the merchandise vulnerable to weakening even more below the level of $ 3,300 and test the horizontal support of $ 3,286-3,285.
On the other hand, the bulls could now wait a movement beyond the round level of $ 3,400 before positioning themselves for a movement towards the next relevant resistance near the area of ​​$ 3,430-3,432. A sustained strength beyond the latter should allow the price of gold to test the historical peak reached in April and make a new attempt to conquer the psychological level of $ 3,500.
FAQS risk feeling
In the world of financial jargon, the two terms “appetite for risk (Risk-on)” and “risk aversion (risk-off)” refers to the level of risk that investors are willing to support during the reference period. In a “Risk-on” market, investors are optimistic about the future and are more willing to buy risk assets. In a “Risk-Off” market, investors begin to “go to the safe” because they are concerned about the future and, therefore, buy less risky assets that are more certain of providing profitability, even if it is relatively modest.
Normally, during periods of “appetite for risk”, stock markets rise, and most raw materials – except gold – are also revalued, since they benefit from positive growth prospects. The currencies of countries that are large exporters of raw materials are strengthened due to the increase in demand, and cryptocurrencies rise. In a market of “risk aversion”, the bonds go up -especially the main bonds of the state -, the gold shines and the refuge currencies such as the Japanese yen, the Swiss Franco and the US dollar benefit.
The Australian dollar (Aud), the Canadian dollar (CAD), the New Zealand dollar (NZD) and the minor currencies, such as the ruble (Rub) and the South African Rand (Tsar), tend to rise in the markets in which there is “appetite for risk.” This is because the economies of these currencies depend largely on exports of raw materials for their growth, and these tend to rise in price during periods of “appetite for risk.” This is because investors foresee a greater demand for raw materials in the future due to the increase in economic activity.
The main currencies that tend to rise during the periods of “risk aversion” are the US dollar (USD), the Japanese yen (JPY) and the Swiss Franco (CHF). The dollar, because it is the world reserve currency and because in times of crisis investors buy American public debt, which is considered safe because it is unlikely that the world’s largest economy between in suspension of payments. The Yen, for the increase in the demand for Japanese state bonds, since a great proportion is in the hands of national investors who probably do not get rid of them, not even in a crisis. The Swiss Franco, because the strict Swiss bank legislation offers investors greater protection of capital.
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.
