- The price of gold clings to profits above $ 3,200 in the midst of growing global economic tensions.
- China would look for other markets since US importers would avoid buying products from them due to higher tariffs.
- Fed Waller supports cuts in interest rates due to growing recession risks.
The price of gold (Xau/USD) clings to profits near the historical maximums (ATH) around $ 3,245 during the North American negotiation hours on Tuesday. Yellow metal demonstrates strength as the growing uncertainty about global economic perspectives due to the tariff policies of the president of the United States (USA), Donald Trump, continues to strengthen the attraction of shelter assets.
Although the commercial war has been limited mainly between the US and China after the Trump statement of a 90 -day break in the execution of reciprocal tariffs for all its commercial partners, except the Asian giant, investors still care that the situation is painful for the global economy.
It is expected that a significant increase in reciprocal tariffs to China by Trump at 125% make Chinese products less competitive for US manufacturers. This would lead Beijing to diversify towards other nations to sell their products. Since products manufactured in China are highly disruptive due to their low -cost competitive advantage, companies of other economies will face significant competition.
Technically, the increase in global economic tensions improves the demand for precious metal shelter, such as gold.
Meanwhile, the firm expectations of the market that the Federal Reserve (FED) will cut interest rates at the June meeting have also provided some strength to the price of gold. The scenario that the Fed lowers interest rates is favorable for assets without performance, such as gold.
On Monday, the governor of the Fed, Christopher Waller, warned that the “new tariff policy” is one of the “greatest clashes” that affect the US economy in decades. Waller gave more weight to latent fears of an economic recession about accelerated inflation expectations and supported the relief of monetary policy.
Technical Gold Analysis
The price of gold is negotiated within the negotiation range of Monday around $ 3,230, but is close to the AH around $ 3,245. The prospects of the price of gold are optimistic since the 20 -day exponential mobile average (EMA) is inclined to rise, quoting around $ 3,090.
The 14 -day relative force (RSI) index is negotiated above 60.00, which suggests a strong bullish impulse.
Looking down, the 20 -day EMA will act as a key support zone for the torque. On the positive side, the round level resistance of $ 3,300 will act as a key resistance zone.
Daily Gold Graph
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.
