- The price of gold enters an upward consolidation phase after reaching a new historical maximum on Thursday.
- A modest rebound of the USD and a positive tone of the risk limit the raw material in the midst of overcompra conditions.
- Concerns for the commercial war between the US and China, the fears of recession and the expectations of feat cuts of the Fed support the Xau/USD torque.
The price of gold (Xau/usd) consolidates the explosive rally of the previous day and oscillates in a range near the historical maximum reached during the Asian session on Thursday in the middle of mixed fundamental signals. The optimistic data of US retailers and the hard line comments of the president of the Federal Reserve (FED), Jerome Powell, on Wednesday, help the US dollar (USD) to gain some positive traction. This, together with a generally positive tone in the variable rental markets, slows the operators when making new bullish bets around the raw material in the middle of slightly overcompricated conditions in short -term graphics.
Meanwhile, operators are still valuing the possibility that the US Central Bank reduces indebtedness costs at least three times by the end of this year, which could limit any significant appreciation of the USD in the midst of the weakened confidence in the US economy. To this is added that the escalation of the commercial war between the US and China should act as a favorable wind for safe refuge assets and contribute to limiting the losses of the price of gold. Therefore, it will be prudent to expect a strong sales monitoring before confirming a maximum in the short term for precious metal and positioning itself for a deepest corrective decrease.
What moves the market today: the price of gold continues to receive support from the growing commercial tensions
- The US Census Office reported Wednesday that retail sales increased 1.4% in March, the greatest increase in more than two years. The reading followed a revised increase of 0.2% in the previous month and was better than the expectation of the market of an increase of 1.3%.
- In addition, the president of the Federal Reserve, Jerome Powell, said that the US Central Bank was not inclined to cut the interest rates in the near future, citing the possible inflationary pressure derived from the aggressive tariff policies of the president of the United States, Donald Trump.
- Meanwhile, the Variable Income Market in Asia-Pacific advanced largely on Thursday, which, together with the appearance of some American dollar purchases (USD), slows the operators when making new bullish bets and limits the potential for rising the price of gold.
- The president of the United States, Donald Trump, initiated a bitter commercial war with China earlier this month and raised tariffs to 145% unprecedented. China responded with 125% tariffs on US products and imposed new export license restrictions on seven rare earths.
- The US government also imposed new license requirements and limited exports of H20 artificial intelligence chips to China. Meanwhile, China’s Ministry of Foreign Affairs said that Beijing will not pay attention if the US continues to play the tariff game.
- Investors are still concerned that the reciprocal tariffs that the two countries are imposing each other hinder global economic growth. This maintains a limit on any optimism in the market and continues to support the safety refuge raw material.
- In addition, operators are still valuing the possibility that the US Central Bank resumes its cycle of feat cuts in June. This slows the USD bulls when it comes to aggressive bets and acts as a favorable wind for non -productive yellow metal.
- The operators now expect the US economic agenda, which includes the publication of the usual weekly applications of unemployment subsidy, the manufacturing index of the Fed of Philadelphia and housing market data, as well as comments of the Fed to take advantage of short -term opportunities.
The price of gold could consolidate its recent strong profits in the midst of a slightly overcompared daily RSI
From a technical perspective, the Daily Relative Force Index (RSI) is maintained above level 70 and shows overcompra conditions. This makes a short -term consolidation or a modest setback before positioning itself for an extension of the well -established bullish trend observed during the last four months approximately. Meanwhile, any corrective setback could be seen as an opportunity to open new bullish positions and it is more likely to remain damping near the level of $ 3,300. The latter should act as a key point, which if it breaks decisively could pave the path for deeper losses.
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.
