- The price of gold recovers positive traction after price movements within the range of the previous day.
- Uncertainties related to trade and geopolitical risks underpin the precious metal of safe refuge.
- A modest strength of the USD could limit the Xau/USD before criticisms of US inflation figures.
The price of gold (Xau/usd) remains in its modest advances intradicted around the 3,340 $ area during the last part of the Asian session on Wednesday, although it remains below the maximum oscillation of the previous night. The operators now seem reluctant and choose to wait for the publication of the US consumer inflation figures before opening new directional positions. Crucial data will influence the Federal Reserve Rate (FED) road cuts, which will drive the US dollar (USD) and provide a new momentum to the non -generating yellow metal.
In the face of the key data, the ruling of a federal appeal court that allows the broad tariffs of US President Donald Trump to remain temporarily add commercial uncertainty. This, together with the persistent geopolitical risks, should continue to act as a tail wind for the price of safe refuge gold. In addition, bets that Fed will reduce indebtedness costs even more in 2025 could stop the USD’s bulls to perform aggressive bets and suggest that the road of lower resistance for the Xau/USD torque is upward.
What moves the market today: the price of gold receives support from the last turn of tariffs
- The president of the USA Donald Trump received a favorable update on Tuesday, since a federal Court of Appeals ruled that his “day of release” tariffs can remain temporarily. Last month, the US International Trade Court blocked the implementation of Trump’s tariffs, saying that the method used to impose them was illegal.
- The last development occurs while the US and China, after two days of conversations in London, agreed to implement the Geneva consensus and relieve commercial tensions. The US Secretary of Commerce, Howard Lutnick, indicated that the agreement should solve problems between the two countries related to rare and magnets.
- Russia continues with its attacks on the northeastern city of Járkov in Ukraine after rejecting a high unconditional fire earlier this month. In addition, Israel continues to bombard the Gaza strip incessantly, maintaining the geopolitical risks at stake and directing safe refuge flows towards the price of gold on Wednesday.
- The US Non -Agricultural Payroll Reports as expected last Friday pointed to a resilient labor market, forcing investors to reduce their bets for an imminent cut of interest rates by the Federal Reserve. However, the markets continue to value the possibility of two rates reductions by the end of this year.
- The US dollar, however, remains confined to a family rank, just above its lowest level since April 22, which played last week, while investors expect more signs on the road cutting path of the Fed. Therefore, the attention remains focused on the publication of the US Consumer Price Index (IPC) of the US.
- This will be followed by the US Production Price Index. Meanwhile, the fundamental context of support should act as a tail wind for the Xau/USD.
The price of gold needs to exceed the obstacle of 3,352-3.353 to support the case of more profits
From a technical perspective, the rebound of the previous night from the neighborhood of the simple mobile average (SMA) of 200 periods in the 4 -hour graph and the subsequent upward movement favor the bulls of the Xau/USD. In addition, the oscillators in this graphic have begun again to gain positive traction and support the case for a new intradic bullish movement. A greater strength beyond the immediate obstacle of 3,352-3.353 will reaffirm the upward perspective and raise the price of gold towards the intermediate obstacle of 3,377-3.378 on the route to the round figure of $ 3,400.
On the other hand, a weakness below the area of ​​3,323-3.322 could continue to attract some buyers and find a decent support near the round figure of $ 3,300. Some continuation sales, which lead to a subsequent fall below the 3,288-3.287 (SMA of 200 periods in the 4-hour graph), could change the bias in favor of the bassists and drag the price of gold towards the monthly minimum, around the 3,245 $ region. The Xau/USD could extend the corrective drop even more and eventually fall to the neighborhood of $ 3,200.
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.
