- Gold cuts a two -day loss streak, winning 1.5% for new fears of commercial war.
- Trump softens the speech on tariffs, but China denies negotiations and demands total elimination.
- Increase the bets for feat cuts of the Fed as the yields fall and economic uncertainty increases.
The price of gold cut two days of losses on Thursday and rose $ 50, or more than 1.50%, amid renewed concerns about the commercial war between the US and China. Although US President Donald Trump softened his position on maintaining 145% tariffs at Beijing, Xau/USD quote $ 3,338 after jumping from minimum daily $ 3,287.
The market mood remains optimistic with Wall Street registering profits. Although operators seem relieved by Trump’s disposition to reach an agreement with Beijing, China plays hard and calls for canceling all “unilateral” tariffs in the US, clarifying that they have not had conversations with the US government.
Gold prices advance supported by the fall in the yields of the US Treasury Bonds The US dollar index (DXY) also feels the impact after reaching four -day peaks against a basket of six currencies.
The US economic data saw the publication of initial unemployment subsidy applications last week, which were aligned with estimates. The requests for durable goods jumped sharply in March, driven by aircraft orders.
Meanwhile, a wave of Federal Reserve officials (FED) monopolized the holders. The president of the Fed of Cleveland, Beth Hammack, declared that the Fed could act as soon as in June if the data supports it, but emphasized that uncertainty weighs on business planning.
The governor of the Fed, Christopher Waller, expressed a similar tone, pointing out that although the action in June continues on the table, the cuts of fees could be driven by a weakening of the labor market. Waller said: “Rate cuts could come from an increase in unemployment.”
Regarding the possibilities that the FED 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 86 basic relaxation points (PB).
Fountain: Prime Market Terminal
What moves the market today: the price of gold rises driven by the weak US dollar
- The 10 -year American treasure bonus yield has decreased to seven basic points, reaching 4.31%.
- The real US yet yields collapsed seven PB at 2.023%, as shown by the yields of protected values ​​against US treasure inflation at 10 years.
- The orders of the US durable goods fired in March 0.9% to 9.2%, driven by aircraft reserves. The initial unemployment subsidy applications for the week that ended on April 19 increased by 222K as expected, from 216K in the previous reading.
Technical Perspective of the Xau/USD: The upward trend of the price of gold resumes as buyers recover the $ 3,300
The upward trend of the gold price resumed, but buyers must exceed the maximum of April 22, $ 386 to prevent sellers from dragging down prices. The next key resistance level would be $ 3,400, followed by $ 3,450 and the $ 3,500 figure.
On the other hand, if the Xau/USD falls below $ 3,300, this could open the door to test $ 3,200 before the peak of April 3, $ 3,167. A rupture of the latter will expose the simple mobile average (SMA) of 50 days in 3,041 $.
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.
