- The price of gold goes back to about $ 3,310 while US President Trump points out advances in commercial conversations between Washington and Japan.
- The war of dignity between the US and China will keep the price of gold limited.
- Commercial conversations between the US and Japan and Powell’s hard line comments have offered some relief to the US dollar.
The price of gold (Xau/USD) corrects slightly to about $ 3,312 in the European session on Thursday after reaching a new historical maximum of $ 3,358 earlier in the day. The precious metal faces profits since significant progress in commercial negotiations between the United States (USA) and Japan has offered some relief in the face of fears of a possible global economic turbulence.
“A great honor to have met with the Japanese delegation on trade. Great progress!” Wrong US president Donald Trump in a publication on the Truthsocial platform on Wednesday.
The positive development in the commercial conversations between Washington and Tokyo indicates that the US president Trump has used the tariff tool to have a dominant position while negotiating bilateral agreements with their commercial partners. This has resulted in a slight decrease in uncertainty in global markets.
However, investors must refrain from going with everything in short positions about the price of gold, since the intensification of the commercial war between the US and China is sufficient to keep the issue of appetite at risk. Precious metals tend to perform better amid high global economic tensions.
The dispute between the US and China has become more a battle of dignity than a scale of tariffs. USA wants China to first start commercial conversations, citing that they need our money. Meanwhile, China is willing to sit at the table, but with mutual respect and interest. On Tuesday, the White House Secretary, Karoline Leavitt, said the president wants China to go first in commercial conversations. “The ball is on China’s court: China needs to make a deal with us, we don’t have to deal with them,” Leavitt said.
What moves the market today: the price of gold falls while the US dollar advances
- The price of gold moves away from its historical maximum of $ 3,358 on Thursday. The slight correction in the price of precious metal is also driven by a nominal recovery in the US dollar (USD). The dollar index (DXY), which follows the value of the dollar against six main currencies, attracts offers about the minimum of three years of 99.00 and moves up to 99.50, at the time of writing.
- Trump’s preference for commercial conversations instead of the imposition of high reciprocal tariffs has relieved uncertainty throughout the world, which is reflected in a slight recovery movement in the US dollar. Technically, a higher American dollar makes investment in gold for investors.
- The USD index faced a relentless mass sale in recent months, since market experts became very pessimistic about US economic growth in the face of Trump’s tariff policies. Market participants anticipated that the imposition of higher tariffs on all imports to the US would lead to an increase in inflation and affect economic growth.
- In addition, a slight hard line comment from the president of the Federal Reserve (FED), Jerome Powell, at the Chicago Economic Club on Wednesday offered some relief to the US dollar. Powell pointed out that the US economy is still firm despite the fact that Trump’s economic policies have generated economic risks. “The US economy is solid despite the increased uncertainty and downward risks,” Powell said. I was sure that the economy is still in a position to expect greater clarity, which gives them confidence to avoid any adjustment in monetary policy.
Technical Analysis: The price of gold is maintained above the key EMAS
The price of low gold from its historical maximums of $ 3,358 on Thursday. However, the general perspective of the price of gold remains bullish since all the exponential mobile socks (EMAS) in the short term are inclined to the rise.
The 14 -day relative force index (RSI) is listed above 70.00, suggesting a strong bullish impulse.
Looking down, the EMA of 20 days about $ 3,135.50 will act as a key support zone for the torque. On the positive side, the resistance at a round level of $ 3,400 will act as a key resistance zone.
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.
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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.
