- Gold falls more than $ 100 from its maximum daily to $ 3,288 in the midst of a feeling of risk.
- Trump says he has no “intention” to say goodbye to the president of the Fed, calming the markets.
- WSJ reports that the US is considering tariff cuts to China; Besent says that there are still no unilateral movements.
Gold prices fell more than 2.50% on Wednesday, since the appetite for the risk improved due to a possible broken tensions between the US and China and the statement of the US president, Donald Trump, that he does not plan to say goodbye to the president of the Federal Reserve (FED), Jerome Powell. At the time of writing, the Xau/USD is traded at $ 3,288 after reaching a daily maximum of $ 3,386.
The narrative in financial markets has not changed. The tariffs continued to drive the price action, and the news that the US could reduce tariffs to China sent to US actions and the prices of gold down.
An article in The Wall Street Journal suggested this, although the secretary of the US Treasury, Scott Besent, threw a bucket of cold water on the mood of the operators. He said Trump has not offered to reduce tariffs to Chinese products unilaterally, insinuating that China should do its part.
On Tuesday, Trump said he has no intention of saying goodbye to Powell and added: “The press echoes things. No, I have no intention of saying goodbye. I would like to see him a little more active in his idea of ​​reducing interest rates.”
In the midst of these comments, gold dropped slightly while the US dollar recovered some land. The US dollar index (DXY), which tracks the value of the US currency in front of a basket of six, rose 0.09% to 99.72.
Regarding the possibilities that the Federal Reserve reduces interest rates in the next meeting, operators see 94% probability of keeping them unchanged, according to Prime Market Terminal. However, operators expect the FED fund rate to end at 3.45%, equivalent to 92 basic relaxation points (BPS).
Source: First Market Terminal
What moves the market today: the price of gold collapses below $ 3,300 in a feeling of risk
- The 10 -year American treasure yield earns two basic points up to 4,371%.
- The real US yet yields are rising 1.5 BPs up to 2,099%, as shown by the yields of treasure protected against inflation to 10 years from the USA.
- As for data, S&P Global revealed that the US manufacturing PMI in April improved 50.2 to 50.7, in contrast to other readings that fell. The Global S&P services PMI for the same period fell from 54.4 to 51.4, below the 52.8 forecasts.
- The US economic agenda for the week includes speakers of the Fed, orders of durable goods and the final reading of the consumer’s feeling of the University of Michigan.
Xau/USD technical perspective: The price of gold remains bullish despite the withdrawal
The gold maintains a bullish bias despite the ongoing setback that leads to the yellow metal below $ 3,300 the Troy ounce. Although it seems that sellers are in charge, they need to drag the Xau/USD below the peak of April 3, $ 3,167 to prove the next key support level, which is the simple mobile average (SMA) of 50 days in 3,032 $.
On the contrary, if buyers recover the $ 3,300, the following key resistance would be $ 3,450, followed by 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.
