- Gold buyers regain control as the feeling of risk aversion extends through financial markets.
- The US dollar and treasure yields fall while operators bet on deeper cuts of rates by the Fed.
- The operators prepare for a crucial week of economic data in the US with GDP, the underlying PCE and the NFP in the spotlight.
The price of gold resumes its upward trend on Monday after erasing some of its previous losses, which led to the precious metal to a daily minimum of $ 3,268. A change in the mood of the market raised the mood of bullion buyers, driving the Xau/USD 0.55%, operating at $ 3,338.
The appetite for the risk became negative as Wall Street erased its previous profits due to the concern of the operators for the commercial war. Investors are also waiting for a crucial week for large capitalization technology companies that report profits, such as Microsoft, Apple, Meta and Amazon. As investors sought security, they continued to buy gold instead of US dollars.
Therefore, the index of the US dollar (DXY), which tracks the performance of the American currency against a basket of six other currencies, fell 0.36% to 99.22. The US treasure yields are also falling, indicating that market participants are concerned about a recession in the USA because operators expect 91 basic relief points by the Federal Reserve (Fed), according to Prime Market Terminal data.
Fountain: Prime Market Terminal
As for commercial conversations, although the US president Donald Trump said there are advances with China, Beijing denied that commercial conversations are being carried out.
This week, the operators are pointing to the publication of US economic data.
Daily summary of market movements: The price of gold rises supported by the fall of yields in the USA.
- The 10 -year American treasure bonus performance has fallen three basic points, reaching 4,224%.
- The real US yet yields collapsed three basic points at 1,954%, as shown by the yields of the treasury protected against inflation to 10 years from the US.
- On Tuesday, the US Agenda will present the last March Jolts report, in which operators expect vacancies to fall from 7,568 million to 7.5 million.
- The US Conference Council (CB) will also publish consumer confidence figures, which are expected to get worse from 92.9 to 87.
- The risks of the global economy falling into a recession are increasing, revealed a Reuters survey.
Xau/USD Technical Perspectives: The bullish gold is prepared to test the $ 3,400
The bullish trend in the precious metal remains intact despite the fact that buyers have failed to push prices above the previous daily maximum, indicating the presence of buyers. However, the vendors also lacked the force to carry the gold below $ 3,300, which could exert pressure on the Xau/USD and bring cash prices to $ 3,200.
On the other hand, while the gold is maintained above $ 3,300, the next key resistance would be the peak last Friday at $ 3,370. If it is exceeded, the next ceiling level will be $ 3,400, followed by $ 3,450.
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.
