- The price of gold rises due to the demand for safe refuge amid commercial uncertainties and growing geopolitical tensions.
- A softer American IPC raises the bets for feat cuts from the Fed and weighs on the USD, further supporting the merchandise.
- The operators now expect the US economic data to obtain a significant impulse later this Thursday.
The price of gold (Xau/USD) is maintained with modest intradic earnings near the weekly maximum when entering the European session on Wednesday and remains well supported by a combination of factors. The optimism about a positive result of high -level commercial conversations between the US and China vanished after the new tariff threat of US President Donald Trump. In addition, the growing geopolitical tensions weigh on the feeling of investors, which, in turn, continues to drive the golden shelter gold up for the second consecutive day.
Meanwhile, the data published on Wednesday showed that consumer prices in the US increased at a slower pace than anticipated in May, reaffirming market bets that the Federal Reserve (Fed) will resume its cycle of feat cuts in September. This leads to a new fall in the yields of the US Treasury Bonds and drags the US dollar (USD) to a monthly minimum, providing additional support for the price of gold without performance. The Xau/USD bulls now wait for the US macroeconomic data before positioning themselves for more profits.
Daily summary of market movements: the price of gold benefits from the global flight to safety and the weakest USD
- The president of the United States, Donald Trump, fueled commercial tensions on Wednesday, saying that he would establish unilateral rates and inform the commercial partners within two weeks. This adds a layer of uncertainty and eclipses the optimism generated by a positive tone after commercial conversations between the US and China in London.
- The US ordered part of the personnel to leave their embassy in Baghdad and allowed military families to voluntarily abandon the Middle East in the midst of growing security risks. This occurs after Iran’s Minister of Defense, Aziz Nasirzadeh, threatened to attack US bases in the region if a conflict explodes for his nuclear program.
- Russia intensified the bombings they said were retaliation measures for the recent attacks of Ukraine. A new concentrated wave of drone attacks in the second largest city in Ukraine, Járkov, first thing on Thursday was reported. This maintains the geopolitical risks at stake and supports the price of gold as a safe refuge.
- In the Front of Economic Data, the US Labor Statistics Office (BLS) on Wednesday that the Consumer Price Index (CPI) general rose less than expected, to 2.4% annualized in May from 2.3% of the previous month. The estimate of the consensus was a reading of 2.5%.
- Meanwhile, the underlying indicator, which excludes volatile food and energy prices, matched the April increase and rose 2.8% during the informed month. Operators are now valuing a 70% probability that the Federal Reserve cut interest rates in September, dragging the US dollar into a monthly minimum.
- The market approach now moves to the US economic agenda on Thursday, which includes the publication of the production price index (IPP) and the usual weekly data of initial unemployment subsidy applications. However, the fundamental background suggests that the path of lower resistance for the XAU/USD torque is upwards.
The price of gold seems to be prepared to appreciate even more and build on the impulse beyond the $ 3,400 brand
From a technical perspective, this week’s rebound from the simple mobile average (SMA) of 200 periods and the subsequent strength beyond the horizontal resistance of $ 3,348-3,350 favor the bulls of the XAU/USD. This, together with positive oscillators in daily/hour graphics, validates the constructive perspective in the short term and should allow the price of gold to rise even more towards the recovery of the round figure of $ 3,400. Something of monitoring should pave the way for an extension of the impulse towards the region of $ 3,430-3,435, above which the merchandise could aspire to test the historical peak again, around the psychological brand of $ 3,500 reached in April.
On the other hand, the aforementioned resistance point, around the area of ​​$ 3,350-3,348, now seems to protect the immediate fall. Any additional setback could be seen as a purchase opportunity near the region of $ 3,323-3,322. This should help limit the fall in the price of gold near the round figure of $ 3,300, or the 200 periods SMA in the 4 -hour graph. The latter should act as a key point, that if it breaks, the short -term bias would change in favor of the bearish operators.
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.
