- The weak US data and tariff threats increase the hopes of an interest rate cut by the Federal Reserve.
- The price of gold consolidates the losses of the previous day and seeks support on Wednesday.
- The feeling of the market tries to break the negativity of Tuesday and could support the price of gold.
The price of gold (Xau/USD) quotes about 2,910 $ at the time of Wednesday, consolidating its position after a drop of 1.3% the previous day, after the markets were scared by the weak consumer confidence data in USA and the most realistic tariff threats of the administration of President Trump. Meanwhile, yields in the United States (USA) have fallen substantially, with markets projecting a rate of 25 basic points (PBS) in June by the Federal Reserve (Fed). This is favorable for precious metal and should see the price action playing from here.
The markets are afraid on March 4, when tariffs on Mexico and Canada will be activated. Just before that, the Fed’s favorite inflation indicator will be published, the Personal Consumption Price Index (PCE), Friday. Many moving elements could make operators maintain dry gunpowder before those events.
What moves the market today: greedy
- The gold remained backed in recent days due to the weak US data that increased the hopes of an interest rate cut of the Federal Reserve as soon as in June and the growing tariff threats of President Donald Trump who have increased The demand for sure shelter, reports Bloomberg.
- In an opinion article by Bloomberg, Lee Baker (owner and president of Claris Financial Advisors, based in Atlanta, and a member of the CNBC Advisory Council) warned that current levels high in gold are preparing markets for a hard correction with investors willing to buy at any cost. This impulse is often seen as a greed movement that generally precedes a great collapse, Bloomberg reports.
- The CME Fedwatch tool sees that the possibilities of an interest rate cut in June only grow day by day. Currently, the tool projects a 66.2% probability that interest rates are lower than current levels compared to 33.8% that there is no rate cut.
Technical analysis: US yields as the main motor
For the second consecutive day, the price of gold is quoted below the daily pivot point. Although the price action seems flat and there is a consolidation, the risk remains that more falls could materialize. The indicator of the relative force index in the 4 -hour graph has room for more falls, so a drop at $ 2,880 could be possible if the sale in the market intensifies again this Wednesday.
Looking up, the first level to recover is the daily pivot point at 2,918 $, which failed to provide support in the first hours of negotiation on Wednesday. In the event that gold can find support if US yields fall even more, resistance R1 in 2,948 and the historical maximum in 2,956 $ are the best levels to be searching for rise.
On the contrary, again visiting the minimum of Tuesday by $ 2,890 is a very plausible result. Since the S1 support is lower by $ 2,882, there really is not much on the road for more falls. Below, pay attention to $ 2,878 (minimum of February 17), where substantial support could be activated.
Xau/USD: 4 -hour graphics
FAQS tariffs
Although tariffs and taxes generate government income to finance public goods and services, they have several distinctions. Tariffs are paid in advance in the entrance port, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and companies, while tariffs are paid by importers.
There are two schools of thought among economists regarding the use of tariffs. While some argue that tariffs are necessary to protect national industries and address commercial imbalances, others see them as a harmful tool that could potentially increase long -term prices and bring to a harmful commercial war by promoting reciprocal tariffs.
During the election campaign for the presidential elections of November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy. In 2024, Mexico, China and Canada represented 42% of the total imports of US Therefore, Trump wants to focus on these three nations by imposing tariffs. It also plans to use the income generated through tariffs to reduce personal income taxes.
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.
