- Gold Price Bulls appears to be reluctant as positive risk tones undermine demand for safe assets.
- Thursday’s bright US macro data supports USD and contributes to capping precious metals.
- Trade-related uncertainty and Fed rate reduction bets should help limit the loss of XAU/USD pairs.
Gold Price (XAU/USD) struggles to boost and vibrate the previous day’s movement of narrow trading bands amid narrow underlying clues during Friday’s Asian session. Signs that will ease tensions between the US and China (the world’s largest economy) continue to support a positive tone of the stock market. Apart from this, the modest US dollar (USD) rise has proven to be another factor that contributes to maintaining the lid on precious metals.
Meanwhile, Federal Reserve officials have expressed their willingness to cut potential interest rates. Furthermore, President Donald Trump’s concerns about the potential flow of potential economic radioactive from trade tariffs and sustained geopolitical uncertainty suggest that the path of least resistance to safe haven goods is maintained, suggesting that he has given some attention to aggressive bear traders.
Daily Digest Market Mover: Gold Price Traders refrain from making aggressive directional bets in mixed queues
- Investors continue to maintain hope during Friday’s Asian session about a potential de-escalation of the US-China trade war, which serves as a headwind of gold prices on safe hulls. In fact, US President Donald Trump said Thursday that trade talks between the US and China are ongoing.
- This was when Guo Jiakun, a spokesman for China’s Foreign Ministry, told reporters that China and the US had not had any talks or negotiations on tariffs, calling the reporting of such information false news. This underscores the uncertainty about the ongoing trade war.
- The US dollar is drawing some support from the mostly bright US macro data released on Thursday. In fact, the U.S. Department of Labor reported that initial unemployment claims for the week ending April 19 had risen conservatively to 222,000, pointing to continued labor market resilience.
- The U.S. Census Bureau reported that the order for durable goods rose 9.2% in March, breaking its 2% forecast, marking its third consecutive rise. Transportation equipment also rose for three months, surged by 27%.
- Meanwhile, the duo of Federal Reserve officials quickly discussed their willingness to cut potential interest rates. In fact, Federal President Cleveland Beth Hammack said that clear and compelling data on economic directions could lead to interest rate cuts as soon as June becomes possible.
- Separately, Fed Gov. Christopher Waller said in an interview with Bloomberg that if tariffs begin to be measured in the job market, he will support interest rate cuts. Additionally, traders are still priced for the possibility that the Fed could reduce borrowing costs at least three times by the end of this year.
- On the geopolitical front, Russian missile attacks on Ukrainian capital Kiev have killed at least 12 people and injured dozens. This is one of the deadliest strikes since Russia began its full-scale invasion over three years ago, playing Geopolitical Risk Premium.
- Traders are currently looking forward to the release of the revised Michigan Consumer Sentiment Index. Apart from this, trade-related developments could affect USD, and along with broader risk sentiment, could create short-term trading opportunities around the Xau/USD pair.
Gold prices may attract some dip buyers and find appropriate support near the $3,300 mark. The bullish bias remains
From a technical standpoint, a good rebound from weekly low tactile sensation at the food stall on Wednesday is near the 23.6% Fibonacci retracement level of the latest leg rising from near the mid-term $2,900 or monthly swinglow. The above barriers are fixed near the area for $3,368-3,370 and should now serve as a key important point. Given that the oscillator on the daily chart is held comfortably in positive territory, a greater strength would allow the gold price to regain the $3,400 mark. The subsequent rise is likely to expand further into the mid-hurdle of 3,425-3,427, with the Bulls able to make new attempts to conquer the $3,500 psychological mark.
Conversely, the weakness below the $3,330 area is still considered an opportunity to buy, approaching the $3,300 mark and approaching a 38.2% FIBO. level. This is followed by a lower weekly swing around the $3,260 area. If it breaks, this week’s rejection slide should pave the way for the $3,500 mark or reopening from the highest peak ever. Gold prices could accelerate the decline towards a 50% retracement level, about 3,225 regions, along the way to the $3,200 mark. Some follow-through sales suggest that precious metals have topped and shifted short-term bias in favor of traders who have weakened their precious metals.
Gold FAQ
Gold has played an important role in human history as it is widely used as a medium of value and exchange. Apart from the gem’s brilliance and usage, precious metals are now widely viewed as safe haven assets. In other words, it is considered a good investment in times of turbulence. Gold is also widely viewed as a hedge against inflation and depreciation currencies, as it is not dependent on a particular issuer or government.
The central bank is the largest holder of money. With the aim of supporting currency in turbulent times, central banks tend to buy gold to diversify reserves and improve the perceived strength of the economy and currency. High gold reserves provide a source of trust in the country’s solvency. The central bank added 1,136 tonnes of gold to its bookings in 2022, worth around $70 billion, according to data from the World Gold Council. This is the best purchase every year since the record began. Central banks in emerging economies such as China, India and Türkiye are rapidly increasing their gold reserves.
Gold is inversely correlated with the US dollar and the US Treasury, both major reserve assets and safe haven assets. As the dollar depreciates, gold tends to rise, allowing investors and central banks to diversify their assets during turbulence. Gold is also inversely correlated with risk assets. While rallies in the stock market tend to weaken gold prices, selling in high-risk markets tends to favor valuable metals.
A wide range of factors allow prices to move. The fear of geopolitical instability or deep recession can quickly escalate gold prices due to their safe conditions. As an asset that does not yield, gold tends to rise at lower interest rates, but the cost of higher money usually weighs the yellow metal. Still, most movements depend on how the US dollar (USD) behaves, as the asset’s price is in dollars (Xau/USD). Strong dollars tend to keep the price of gold down, while weaker dollars can push the price of gold up.
