- The price of gold reaches a new historical maximum about $ 3,400 while Trump considers the dismissal of Powell of the Fed for supporting a “waiting and seeing” approach on interest rates.
- Doubts about the independence of the Fed have significantly weighed on the US dollar.
- President Trump expresses confidence in commercial conversations with some commercial partners
The price of gold (Xau/USD) renews historical maximums about 3,400 $ at the beginning of the week. The precious metal is strengthened while the US dollar (USD) weakens, with the independence of the Federal Reserve (Fed) under threat while the president of the United States (USA), Donald Trump, considers to dismiss the president of the FED, Jerome Powell.
The US dollar index (DXY), which tracks the value of the dollar against six main currencies, collapses about 98.00, the lowest level seen in three years. Technically, a weak US dollar makes gold an attractive bet for investors.
The president of the United States, Trump, criticizes Powell for not reducing interest rates even though the prices of some goods, and oil have fallen significantly. “The Fed really owes American people to lower interest rates. That is the only thing for which it is good,” Trump said and added: “I’m not happy with him. If I want him to leave, he will leave very fast, believe me,” Trump said Friday.
Meanwhile, the Economic Advisor of the White House, Kevin Hassett, has also confirmed that the president and his team are looking for ways to dismiss Powell. “The president and his team will continue studying that matter,” said Hassett on Friday.
The participants of the financial market have taken these comments as negative for the prospects of the US dollar, since they raise doubts about the independence of the Fed of political operations, forcing them to further degrade their safe refuge status.
Lately, the holders in constant change of Washington on their tariff agenda have forced investors to reassess the status of the US dollar as “reserve currency.” Market experts believe that the imposition of worse tariffs than expected by Donald Trump is painful for the US economy itself, theoretically, the increase in economic concerns in the US improves the demand for safe refuge for precious metals, such as gold.
What moves the market today: the price of gold could decrease if global economic uncertainty decreases
- The price of gold is at its highest point due to scaled commercial tensions and the weakness of the US dollar. However, the demand for sure refuge for precious metal could soon reduce as US trade conversations with their commercial partners advance.
- President Trump has expressed confidence in reaching an agreement with Japan and Mexico after meeting with his representatives last week. “I had a very productive call with the president of Mexico yesterday. Likewise, I met with the highest level commercial representatives of Japan. It was a very productive meeting. Each nation, including China, wants to meet! Today, Italy!”, President Donald Trump wrote in a publication on the Truthsocial platform on Thursday.
- During the long weekend due to Good Friday, Trump said: “There will be a commercial agreement, 100%,” and added: “But it will be a fair agreement.” His comments occurred after meeting with the Prime Minister of Italy, Giorgia Meloni, the first leader of the European Union (EU) to meet with Trump after the announcement of reciprocal tariffs.
- Meanwhile, President Trump is also sure of reaching an agreement with China. “We are having good conversations with China. It’s really very good,” Trump said Friday. In addition, US Secretary of Commerce, Howard Lutnick, has also expressed optimism on a commercial agreement between the US and China and said during the weekend: “We are sure that it will work with China.”
- Market participants expect the closure of commercial agreements between the US and its commercial partners, especially China, lead to the reversal of the reciprocal tariffs announced by Trump. Such scenario will reduce global economic uncertainty and weigh on the demand for safe refuge for precious metals.
Technical Analysis: Gold rises about $ 3,400
The price of gold jumps about $ 3,400 on Monday. The precious metal has shown a strong increase for more than a week after an upward breakdown of the ascending channel of one year formed in the daily chart. The upper edge of the aforementioned graphic pattern is drawn from the maximum of April 12, 2024 of 2,431 $, while the lower edge is placed from the minimum of February 15, 2024 of 1,990.30 $.
All long -term exponential mobile socks (EMA) are inclined to the rise, which suggests a strong bullish trend.
The 14 -day relative force (RSI) index jumps about 75.00, indicating a strong bullish impulse, although in overcompra conditions.
Looking down, the maximum of April 11, $ 3,245 will act as a key support zone for the torque. On the positive side, the round level resistance of $ 3,500 will act as the key resistance zone once the gold breaks above the level of $ 3,400.
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.
