- Xau/USD expands profits amid geopolitical tensions despite solid US employment data
- US tariffs on Canada's aluminum and steel imports begin Wednesday, boosting the appeal of gold's safe haven.
- The market is waiting for CPI inflation data on Wednesday and PPI on Thursday.
Kim (Xau) gathered on Tuesday. Bright US (US) employment data was ignored by traders who continued to stack bullion. Xau/USD is trading at over 1% for $2,917.
Recent sentiment has improved as Canada and the US ruled out the threat of imposing tariffs. Concerns about the US economic slowdown put downward pressure on the US Treasury yields and greenback, a tailwind for bullion prices.
Meanwhile, Trump's trade tariffs on aluminum and steel imports will come into effect Wednesday. The US Bureau of Labor Statistics (BLS) has announced that job openings rose in February.
Breaking news from Saudi Arabia revealed that Ukraine is ready to accept the ceasefire proposal, Secretary of State Marco Rubio revealed. Ukrainian President Voldymi Zelensky added: “It's now up to the United States to persuade Russia to agree to a ceasefire.”
This could be a headwind of gold prices that tend to rise due to geopolitical tensions and fears of recession.
Meanwhile, Xau/USD traders saw the release of the Consumer Price Index (CPI) in the US on Wednesday, and the Producer Price Index (PPI) was released on Thursday.
Daily Digest Market Movers: High Yields of Gold Prices in the US
- The US 10-year Treasury bond yield will rise by 4.282%, up 4.282% from 6 basis points as Traders sees Fed interest rate cuts.
- The US real yield is measured by the yield on the US 10th Treasury Department's Inflation Protection Securities (TIPS), and yields that are inversely correlated with gold prices increase the basis points of five and a half people to 1.963%.
- The Atlanta Fed GDP Model forecasts the first quarter of 2025 at -2.4%.
- The US Jolts report showed job openings rose to 77.4 million in January, exceeding expectations of 7.58 million to 7.63 million, signaling continued strength in the labor market.
- According to the World Gold Council (WGC), the People's Bank of China (PBOC) continues to buy gold. The PBOC increased its holdings by 10 tons in the first two months of 2025. However, the biggest buyer was the National Bank of Poland (NBP), which increased its largest purchase since June 2019, when it purchased 95 tons in June 2019.
- Money market traders were relaxed in 2025 from 74 bps from last Friday at 77.5 basis points via data from Prime Market Terminal.
Xau/USD technology outlook: Gold price advances above $2,900
From a technical standpoint, gold continues to rise, but buyers will have to clear last week's peak at $2,930 at the high of March 7th, allowing buyers to challenge the psychological mark. The latter violation marks a record high of $2,954, followed by the $3,000 mark.
Conversely, if Xau/USD falls below $2,900, the next support will be $2,850 compared to $2,832 on February 28th. Next is $2,800.
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 stock 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.
