- The gold rebound stops, falling 0.18% after taking benefits and Powell’s comments from the Fed.
- The president of the Fed, Powell, quotes strong economic indicators and does not see immediate need for feats of fees in the middle of commercial tensions.
- It is anticipated that future economic reports from the US and Fed speeches impact even more on the gold trajectory.
Gold prices fell during the American session, falling a minimum of 0.18% on Tuesday after reaching a historical maximum of 2,942 $ early in the session. Increased tensions due to the commercial war caused by the new tariffs of the president of the United States (USA), Donald Trump, they pushed the golden metal to new historical maximums before going back. The Xau/USD quotes about $ 2,900 at the time of writing.
The narrative of the financial markets remains unchanged after Trump decided to apply 25% tariffs on steel and aluminum imported to the United States. Initially, the prices of the ingots rose, but the operators took benefits before the testimony of the president of the Federal Reserve (FED), Jerome Powell, in the US Senate.
At his audience, Powell said that Fed is not in a hurry to reduce the costs of loans due to the strength of the economy and that inflation is maintained above the objective of 2%. He added that the labor market is “widely balanced” and that it was not an inflationary source of pressure.
When asked if the US economy would enter recession, he denied it.
As for the data, the NFIB small businesses optimism index fell to 102.8 in January from 105.1 in December, the highest figure since October 2018.
This week, the US economic agenda will include inflation figures of consumers and producers, along with more speeches of the Federal Reserve.
What moves the market today: the price of gold goes back while the US treasure yields rise.
- The 10 -year -old American treasure bonus performance rises three basic points (PB) to 4,531%.
- The real US yields, which are inversely correlated with the prices of the ingots, earn a PB and are located at 2,079%, an obstacle to the Xau/USD.
- The ingot has seen a greater demand from the central banks, with the Golden Purchases from the central banks increased more than 54% year -on -year to 333 tons, according to WGC data.
- The New York Fed consumer survey revealed that inflation expectations remain well anchored despite the fact that the estimates of short -term inflation consumers are located at 3%. However, five -year expectations increased from 2.7% to 3%.
- Cleveland’s president of the Fed, Beth Hammack, preferred to keep stable interest rates for a prolonged period so that the Federal Reserve could evaluate economic conditions. He described the current monetary policy as “moderately restrictive” and highlighted the continuous uncertainty about whether inflation will continue to approach the 2% objective of the Fed.
- Last week, US employment data were mixed, although the fall in the unemployment rate suggests the strength of the labor market. This could prevent the Fed from cutting the rates soon.
- A Reuters survey showed that the Fed is expected to wait until the next quarter before cutting the rates again.
- Futures of the Federal Funds Rate of the Monetary Market are valuing a flexibility of 38.5 basic points by the Federal Reserve in 2025.
XAU/USD technical perspective: The price of gold goes back and clings to $ 2,900
The price of gold price is inclined up despite forming a ‘doji’ near the figure of $ 2,900 after reaching a historical maximum of 2,942 $. This suggests that buyers are reluctant to boost the highest prices.
The relative force index (RSI) suggests that the bullish impulse remains, but being in overcompra territory opens the door to a setback.
If the Xau/USD falls below $ 2,900, the first support would be the psychological brand of 2,850 $. Once exceeded, the maximum of the October 31 cycle converted into support in $ 2,790 is the following, before the minimum of January 27, $ 2,730.
On the other hand, if the bulls push prices above the historical maximum, the key levels of resistance are ahead, such as the psychological figure of 2,950 $, followed by the 3,000 $ brand.
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 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.
