- Gold prices remain stable near a weekly high, lacking bullish convictions.
- Trade war horrors, Fed rate reduction measures, and bearish USD support the Xau/USD pair.
- Positive risk tones limit products ahead of Friday's US NFP report.
Gold Price (XAU/USD) struggles firmly during the Asian session, extending the movement of horizontal integrated pricing for the second day in a row on Thursday. President Donald Trump's tariff measures continue to serve as a tailwind for safe haven bullion. Separately, bearish sentiment over the US dollar (USD) and betting surges on pre-expected interest rates cut by the Federal Reserve proved to be other factors supporting the non-Yelielding yellow metal.
However, the general positive tone of the stock market is preventing the Bulls from placing new bets on gold prices. Investors are also reluctant and choose to wait for details on monthly U.S. employment in the United States or for non-farm payroll (NFP) reports on Friday. In the meantime, a normal weekly initial unemployment claim from the US may provide some impulse later in the North American session. Nevertheless, the basic background suggests that the path with the least resistance in the Xau/USD pair is upside down.
Daily Digest Market Mover: Gold Price Traders Stay on the Bystanders ahead of Friday's NFP Report
- US President Donald Trump's new 25% tariffs on most imports from Mexico and Canada came into effect Tuesday, doubleping China's goods obligations to 20%.
- Canada has announced retaliatory tariffs on more than $100 billion in US products, while China has slapped tariffs of up to 15% on various US agricultural exports.
- In his first address to the US Congress, Trump said further tariffs, including “mutual tariffs,” will continue on April 2nd, increasing the risk of a full trade war.
- Investors are worried that Trump's tariffs could slow US economic growth and force the Federal Reserve to cut interest rates multiple times by the end of this year.
- The bet was lifted by an Automatic Data Processing (ADP) report. This showed that private sector employment in the US would increase by just 77k in February, with 140K expected.
- Meanwhile, economic activity in the U.S. services sector continued to expand at an accelerated pace in February, but rarely stimulated the US dollar bull.
- The USD Index (DXY) has fallen to its lowest level since December 2024, and will further serve as a tailwind for gold prices during Thursday's Asian session.
- The White House has announced a one-month delay for US automakers to comply with the US-Mexico-Canada agreement on tariffs imposed on Mexico and Canada.
- This increases investors' appetite for risky assets, preventing traders from making aggressive bullish bets around the Safe Haven Xau/USD pair.
- Investors are currently focusing on US non-farm salaries on Friday, but are turning to the usual first unemployment claim data from the US on some driving forces.
Gold prices are below the pivotal resistance of $2,934. The possibility of bullishness seems unharmed
From a technical standpoint, momentum beyond the $2,934 immediate hurdle could bring gold prices back to its all-time high peak, turning the $2,956 area touched in February into the area at around $2,956. Some follow-through purchases are considered fresh triggers for bullish traders and will pave the way for an extension of the uptrends a few months ago, seen among positive oscillators on the daily chart.
On the other hand, the lack of follow-through purchases requires some attention before positioning them for further profits. That said, the revised slide is considered a purchase opportunity close to the $2,900 mark and may remain limited. However, some follow-through sales could pave the way for a deeper loss to 2,884-2,883 $2,883 intermediate support, towards horizontal support of $2,860-2,858.
Risks of sentiment FAQ
In the world of financial jargon, two widely used terms, “risk-on” and “risk-off” refer to the level of risk that investors are willing to anger their stomachs during the reference period. In the “risk-on” market, investors are optimistic about the future and are willing to buy more risky assets. In the “risk-off” market, investors start to “play safely” as they worry about the future.
Typically, during a period of “risk-on”, the stock market will rise, and most commodities (except gold) will also be of value as they benefit from positive growth prospects. The country's currency, which is a heavy commodity exporter, is strengthened by increasing demand, leading to cryptocurrencies rising. In the “risk-off” market, bonds rise. The government's major bonds – gold in particular shines, and safe home currencies such as the Japanese yen, Swiss franc and the US dollar all make profits.
Minor FX like the Australian Dollar (AUD), Canadian Dollar (CAD), New Zealand Dollar (NZD), and minor FX like the minor FX Ruble (Rub) and South African Rand (ZAR) all tend to rise in markets that are “risk-on.” This is because the economy of these currencies relies heavily on exports of goods for growth, and commodities tend to have higher prices during the risk-on period. This is because investors predict greater demand for future raw materials due to strengthening economic activity.
The major currencies that tend to rise during the “risk-off” period are the US dollar (USD), Japanese yen (JPY), and Swiss franc (CHF). It is the world's reserve currency, and because investors buy US government debt during times of crisis, the US dollar is considered safe because the world's largest economy is unlikely to default. This is because the yen, which is due to an increase in demand for Japanese government bonds, is held at a high percentage by domestic investors who are unlikely to abandon them even when they are at stake. The Swiss franc is because investors are strengthening capital protections due to strict Swiss banking laws.
