- Gold wins despite the mood of risk while the yields go back and the US dollar weakens.
- Trump gives Besent flexibility in export controls, helping conversations between the US and China.
- Tensions between Russia and Ukraine persist, maintaining the demand for safe refuge for gold.
Gold prices recorded solid profits on Monday while the US dollar weakened during the US session despite the positive news about commercial conversations between the US and China. A setback in the yields of the US Treasury bonds supports the golden metal, which is quoted at $ 3,329, the Troy ounce at the time of writing.
An improvement in the appetite for the risk was not an excuse for bullion buyers to extend the upward trend of the Xau/USD despite the decrease in the demand for shelter assets. An article from the Wall Street Journal mentioned that US President Donald Trump granted some flexibility in export controls to the US Treasury Secretary, Scott Besent, while conversations between the US and China began on Monday.
The decrease in tensions between Washington and Beijing could undermine the attractiveness of gold. However, if the yields of the US Treasury bonds continue to fall, this would limit the fall of the ingot.
The US dollar index (DXY), which tracks the performance of the US dollar in front of a basket of six currencies, falls 0.25% to 98.95, making the asset called in US dollars more expensive for foreign buyers.
Geopolitical tensions remain high as Russia claimed the control of territory in the East-Central Region of Ukraine. An escalation of the conflict could push the highest gold prices, clearing the way to test $ 3,350 in the short term.
This week, the operators are attentive to the publication of the US Consumer Price Index (ICC) of the US, followed by the Production Price Index (PPI), employment data and the consumer’s feeling survey of the University of Michigan (UOM).
What moves the market today: Gold rises while US yields fall, undermining the US dollar
- The 10 -year bonus from US bonus falls three basic points to 4,478%. The real US yields have followed the same trend and have also dropped the same amount to 2,168%, a wind against the bullion prices.
- Gold prices are recovering after an optimistic report of US non -agricultural payrolls in May. The result exceeded 130K forecasts, increasing by 139K, while the unemployment rate remained stable at 4.2%. The data reinforced the waiting and seeing approach of the Federal Reserve (Fed), feeding a reduction in fees of feature cuts, with the operators waiting less than two rate cuts this year.
- On Wednesday, the US CPI is expected to rise from 2.3% to 2.5% year -on -year, with projected underlying figures to increase from 2.8% to 2.9% interannual. If the numbers arrive as expected, the Fed would not have margin to reduce interest rates as the Trump president demands.
- The weekend data showed that the Central Bank of China added gold to its reservations in May for seventh consecutive month.
- The de -escalation of tensions in the commercial war between the US and China could exert the downward pressure on gold, which until now has gained more than 26% this year.
- The monetary markets suggest that the operators are valuing 44.5 basic points of relaxation towards the end of the year, according to Prime Market Terminal data.
Fountain: Prime Market Terminal
Xau/USD technical perspective: The price of gold advances to $ 3,350
Gold prices fell to a support line of support below $ 3,300 before bouncing from those levels to the daily maximum about $ 3,340, which has opened the door to challenge the level of $ 3,350. The relative force index (RSI) remains bullish; Therefore, if the Xau/USD exceeds $ 3,400, the yellow metal would be prepared to challenge key resistance levels.
Next is the 3,450 $ brand, followed by the historical maximum of $ 3,500. On the contrary, if gold falls below $ 3,300, sellers could carry the lowest performance metal to test the simple mobile average (SMA) of 50 days at $ 3,260, followed by the maximum of April 3, which has since supported a 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.
