- The price of gold attracts some sellers for the second consecutive day amid the decrease in the demand for safe refuge.
- A stronger USD exerts even more pressure on the merchandise in the midst of relaxation signals of commercial tensions.
- The expectations of fed rate cuts could limit USD and help contain losses of the yellow metal, which does not yield.
The price of gold (Xau/USD) attracts vendors for the second consecutive day and falls closer to the 300 $ brand during Wednesday’s Asian session, although it lacks continuation. The optimism on relaxation signals of commercial tensions between the US and China and the decision of US President Donald Trump to give flexibility in tariffs to US car manufacturers. It continues to support a positive risk tone. This, together with a modest rebound of the US dollar (USD), contributes to the offered tone that surrounds the precious metal.
Meanwhile, investors are still concerned about Trump’s rapid change in commercial policies, which led to a great turn far from American assets recently. This, together with the growing acceptance that the Federal Reserve (Fed) will soon resume its cycle of feat cuts, could stop the USD bulls when opening aggressive positions and acting as a tail wind for the yellow metal, which does not yield. The operators now expect the key macroeconomic publications of the US for a new impulse during the final part of the week.
What moves the market today: the price of gold remains depressed in the midst of the decrease in the demand for safe refuge and the modest strength of the USD
- President Donald Trump signed an order on Tuesday to alleviate the effects of tariffs on the automotive industry, giving car manufacturers two years to increase the proportion of national pieces in assembly vehicles in the US in the US.
- The US dollar attracts some buyers for the second consecutive day and also acts as a wind against the price of gold. However, investors remain in the tightrope, since Trump’s erratic commercial policies continue to feed concerns about a strong economic slowdown. In addition, the expectations that the Federal Reserve soon resume its cycle of rates cuts should limit any significant rebound of the USD.
- The moderate expectations of the Fed were reaffirmed by the disappointing employment offers data and the US Labor Rotation Survey (Jolts) and the consumer’s confidence index of the US Board Conference of the US Board published on Tuesday. In fact, the US Labor Statistics Office (BLS) reported that employment offers in the US fell to 7.19 million on March from 7,480 million in the previous month.
- In addition, the US Consumer Trust Index fell to 86.0 in April, or a minimum of almost five years. In addition, the current situation index and the expectations index fell to 133.5 and 54.4, respectively, during the month reported. The data reinforces the case for a more aggressive relief from the Fed and should support the yellow metal, which does not yield.
- In the geopolitical front, Russia dismissed Ukraine’s proposal to extend the high unilateral fire of Russian President Vladimir Putin at 30 days. In addition, USA threatened to stop her efforts to end the conflict between Russia and Ukraine if both parties did not present concrete proposals. This contributes even more to limit the fall of the XAU/USD torque.
- The operators now wait for the US economic agenda on Wednesday, which includes the ADP report on the employment of the private sector, the advanced publication of the GDP of the first quarter and the Personal Consumption Expenditure Index (PCE). This, together with the US non -agricultural payroll report on Friday, should provide clues about the Fed policy perspective and influence short -term merchandise.
The price of gold could aim to test the key support of 3,265-3.260 once the 3,300 mark decisively breaks
The indicators technicians in the graphic Diario remain comfortably in positive territory and favor the bulls of the Xau/USD. Therefore, any additional weakness below the immediate support of 3,300-3,290 $, which represents the level of fibonacci setback of 38.2% of the last rise from the neighborhood of the $ 2,900 or the monthly minimum, could continue to find a good support near the 3,265-3.260 $ area. However, a convincing rupture below the latter would establish the stage for an extension of the recent setback from the historical maximum reached last week. The downward trajectory could drag the price of gold towards the 50%setback level, around the $ 3.225 region, en route to the $ 3,200 mark.
On the contrary, the maximum of the Asian session, around the 3,328 $ region, could act as an immediate obstacle before the 3,348-3,353 $ zone. This is closely followed by the supply zone of 3,366-3.368 $, which if it is cleared should allow the price of gold to recover the 3,400 $ brand. The impulse could extend even more towards the intermediate obstacle of 3,425-3.427 $ before the bulls make a new attempt to conquer the psychological brand 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.
