- Gold wins 2% while DXY falls, even when the ISM services PMI points out a resistant American economy.
- Trump announces 100% tariffs on foreign films, he says that Powell will not be removed early but urges rates cuts.
- Markets completely discount that the Fed will maintain its position on Wednesday; Powell’s press conference in policy signals focus.
Gold prices (Xau/USD) jumped more than 2%, or more than $ 70, on Monday, since the dollar was beaten, although US positive economic data (USA) suggest that the economy remains solid. The XAU/USD quotes at $ 3,309 after bouncing from minimums of $ 3,237 $.
The mood of the market improved after a report from the Supply Management Institute (ISM) that secured the robustness of the US economy. The data suggested that prices are rising, driven by the tariffs of US President Donald Trump.
During the weekend, Trump announced 100% tariffs on films produced abroad while saying that the Federal Reserve (Fed) should lower interest rates. He said he will not remove the president of the FED, Jerome Powell, before his term ends in May 2026.
Trump added that the US is meeting with many countries, including China, and that its main priority is to reach an agreement with Beijing.
Meanwhile, operators prepare for the Federal Reserve monetary policy meeting on Wednesday. The markets have completely discounted that the US Central Bank will keep the rates unchanged, although they will be attentive to the press conference of the president of the Fed, Jerome Powell. Those responsible for the policy will not update their forecasts until the June meeting, which could provide some clues about monetary policy.
What moves the market today: the price of gold is not affected by the increase in the yields of the US Treasury bonds.
- Lagote prices remain supported, although the yields of the US Treasury bonds rise. The 10 -year Treasury bonus yield from the US rises four basic and average points to 4.35%. At the same time, the real US reactions regain five basic points to 2,087%, as shown by the yields of the US Treasury values protected against inflation at 10 years.
- The ISM Services PMI rose to 51.6 in April, from 50.8 and exceeding 50.6 expectations, pointing out a slight improvement in the activity of the services sector.
- Notably, the subscript of paid prices shot at 65.1 – His highest level since February 2023 – Subjecting from 60.9, indicating a reacting in inflationary pressures of inputs.
- The non -agricultural payroll figures of the US last week exceeded estimates despite being below March numbers, suggesting that the labor market is still solid. It should be noted that the unemployment rate remained unchanged in 4.2%, justifying the Fed waiting position regarding monetary policy.
Xau/USD technical perspective: The price of gold is prepared to challenge the $ 3,350
The update of the price of gold resumed since today’s price action confirmed a graphic pattern of two ‘harami alcista’ candles, indicating that the bulls are gaining impulse. The relative force index (RSI) confirmed the above, since the RSI line points up.
Therefore, operators will face key resistance levels such as $ 3,350, followed by the figure of $ 3,400. If it is exceeded, the next stop would be $ 3,450 and $ 3,500. On the contrary, if the sellers drag the spot price of the XAU/USD below $ 3,300, look for a minimum proof of May 1, $ 3,202, before the maximum of April 3 that became 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.
