- The Xau/USD briefly reached $ 3,360 before cutting profits and now trades about $ 3,320.
- The May US CPI does not meet the forecasts, raising the hopes of a relief by the Fed in September.
- Commercial conversations between the US and China show advances, but approval is still aware of the main leaders.
Gold prices recorded modest profits of more than 0.22% on Wednesday, since the latest inflation report in the United States (USA) revealed that prices are cooling. Therefore, investors increased their bets that the Federal Reserve (FED) would resume its relief cycle in September. The XAU/USD quotes at $ 3,327.
The May Consumer Price Index (CPI) in the US provided an opportunity for gold buyers. The figure decreased compared to April data, and the prices of the ingot shot towards a daily peak of 3,360 $ – in the holder – before erasing those earnings.
The uncertainty about negotiations between the US and China will probably maintain the highest gold prices. Although US Secretary of Commerce, Howard Lutnick, said they have reached a framework to implement the Geneva consensus, is aware of the approval of the US president, Donald Trump, and his counterpart Xi Jinping.
At the same time, the Vice Minister of Commerce of China, Li Chenggang, said the conversations “involved deep exchanges and communications that were rational and sincere.” He added that he will report on the framework to the leaders and hopes that progress can increase confidence between the two countries.
The merchants approach moved to the publication of the producer price index (IPP) and employment data. The latest surveys of the Purchase Managers Index (PMI) of the ISM showed that the prices of supplies for companies had increased. Although May IPC data were positive, analysts suggest that homes still do not feel the impact of tariffs.
What moves the market today: gold stands firm while the dollar and US yets fall
- The weakness of the US dollar could keep the gold prices supported. The US dollar index (DXY), which tracks the value of the dollar against a pairs basket, falls 0.44% to 98.61, reaching minimum of four days.
- The yields of the US Treasury bonds are collapsing; The 10 -year Treasury bonus performance has fallen five basic points (PBS) to 4.42%. The real US yet yields followed the same trend, falling five basic points to 2.13%, promoting the advance of the ingot.
- Inflation in the US increased less than expected in May, with the general CPI rising a 2.4% year -on -year, below the 2.5% prognosis but slightly above 2.3% in April. The underlying IPC remained stable at 2.8% year -on -year, matching the figure of the previous month and indicating a persistent but stable underlying price pressure.
- Geopolitical tensions are still high, since US president Trump told Fox News that Iran is becoming much more aggressive in nuclear conversations. Iranian Foreign Minister said: “As we resume the conversations on Sunday, it is clear that an agreement that can guarantee the continuous peaceful nature of the Iran nuclear program is within reach – and could be achieved quickly.”
- The monetary markets suggest that the operators are valuing 47.5 basic stitches of relief towards the end of the year, according to Prime Market Terminal data.
Fountain: Prime Market Terminal
Xau/USD technical perspective: The price of gold is consolidated below $ 3,400
The price of gold maintains a bullish bias, but the price share in the last two days indicates that buyers are reluctant to take the price to cash above $ 3,400. The relative force index (RSI) remained flat near its neutral line, which confirms even more a market without trend.
For an upward continuation, the Xau/USD needs to climb above $ 3,350 to challenge $ 3,400. More strength is found in $ 3,450 and the historical maximum (AH) at $ 3,500.
On the contrary, if gold falls below $ 3,300, the door will open to test key support levels, such as the simple mobile (SMA) of 50 days at $ 3,269. Below that level is the maximum of April 3 converted into support at $ 3,167.
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.
