- Gold extends profits for the fourth consecutive day in response to Trump’s tariff threats.
- The safe refuge demand provides a favorable wind for gold before the US inflation data on Tuesday.
- The Xau/USD breakout carries the psychological resistance of $ 3,400 to the focus.
Gold (Xau/USD) is going up on Monday in response to the news that the US could impose a 30% tariff on the imports of the European Union (EU) and Mexico, effective as of August 1.
The latest tariff threats on two of the largest commercial partners in America have provided a favorable wind for the Xau/USD. At the time of writing, the price of gold is traded by about $ 3,370, while the bullies point to psychological resistance at $ 3,400.
The president of the European Commission, Ursula von der Leyen, and the president of Mexico, Claudia Sheinbaum, received letters from the president of the United States, Donald Trump, on Saturday. His comments fed fears of a new wave of general tariffs, increasing the demand for gold as geopolitical coverage.
A occupied day of economic data on Tuesday will probably serve as an additional catalyst for gold. As those responsible for policies evaluate the possible implications of specific tariffs by country and sector, US inflation data will be at the Center for Care.
Daily Gold Summary: Xau/USD reacts to Trump’s tariffs before the key public data publications
- Reuters reports indicate that 23 countries have received letters from the US president to date. 50% tariffs on Brazil’s imports remain the highest announced so far.
- Formal letters have also indicated that these rates “can be modified, upwards or the loss, depending on our relationship with your country.”
- Trump’s publication in Truth Social also warned the EU against reprisals, citing that “any number they choose to increase them … will be added to 30%.”
- The EU commissioner, von der Leyen, replied on Sunday. An official statement was published in the press corner of the European Commission, which said: “We are ready to continue working towards an agreement for August 1. At the same time, we will take all the necessary measures to safeguard the interests of the EU, including the adoption of proportional countermeasures if necessary.”
- Talking to NBC News on Thursday, Trump also warned about broader actions, stating: “We are simply to say that all the remaining countries will pay, either 20% or 15%. We will solve it now.”
- USA will publish the data of the Consumer Price Index (CPI) for June on Tuesday, providing additional information on whether tariffs are being reflected in prices. With the Federal Reserve (FED), monitoring the tariff risks, this report has a direct impact on monetary policy expectations.
- China’s second quarter GDP, industrial production and June retail sales are also scheduled for publication on Tuesday. Any disappointment that reflects a significant deceleration in economic activity will probably continue to support the bullish impulse for gold.
Technical Gold Analysis: Xau/USD breaks the resistance of the triangle, $ 3,400 in the focus
Gold has left the triangle pattern in the daily framework, suggesting a change in impulse.
The movement above the higher trend line and the simple mobile average (SMA) of 20 days about $ 3,340 indicates a growing upward pressure.
The current price action is testing the fibonacci setback of 23.6% of the low-high movement of April, around $ 3,371, which is closely aligned with the maximum current.
Gold (Xau/USD) Daily graph
If the Xau/USD can maintain a closure above this area, the next upward objective is the psychological barrier at $ 3,400.
A clear breakdown of this level could open the door for the maximum of June of $ 3,452, bringing the April record about $ 3,500.
In the lower part, a movement below the 50 -day SMA at $ 3,327 would bring the psychological support level of $ 3,300 again.
With the relative force index about 56, the impulse is being negotiated with a bullish bias. However, there is still room for prices to advance more before the market between overbound territory.
GOLD – FREQUENT QUESTIONS
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.
