- Xau/USD jumps more than 1% as global tensions rise, inventory slides and the US dollar weakens.
- Trump's 25% auto rates create trade war unrest and drive safe demand for gold to a new all-time high.
- When Wall Street collapses and DXY reverses, the risk appeal collapses.
- Traders are awaiting our core PCE inflation amid corporate employment data and priced 64.5 bps Fed cuts in 2025.
The rising trend in gold prices continued Thursday, with Yellow Metal hitting a new $3,059 record amid uncertainty over the trade policy enacted by US President Donald Trump, which escalated the trade war by imposing tariffs on cars. Xau/USD is $3,051, an increase of over 1%.
Tariffs continue to encourage price action after Trump announced on a 25% obligation on cars and auto parts not manufactured in the US (US). As uncertainty increased, bullion traders purchased precious metals and extended their profits by more than $3,050.
As a result, risk appetite has been exacerbated by the Red Wall Street deal. Greenback also measures the U.S. Dollar Index (DXY), which measures the performance of the back against a basket of six currencies, measures U-turns and drops to 0.33% to 104.31.
This sparked a response from the world government between Canada and the European Union, threatening to oppose Trump's actions.
Following last week's unemployment claims report, the US labor market remains solid, but the economy remains strong after the publication of GDP data for the last quarter of 2024. Housing data has improved, but a slowdown in the housing market has been confirmed.
Meanwhile, Money Market has set prices in 2025 at 64.5 base points. Prime Market Terminal Interest rate probability.
Source: Prime Market Terminal
Separately, the trader's focus will shift to the announcement of the Fed's preferred inflation gauge, CORE's personal consumption cost (PCE) price index.
Daily Digest Market Mover: Trump's comments on gold price trading company $3,000
- The US's 10-year T-note yield is almost flat, with one basis point rising at 4.371%. According to the yield on the US Treasury Department's Inflation Protection Securities (TIPS), the US real yield reduces the 1 bps edge to 1.979%, down to 1.979%.
- The US initial unemployment claim for the week ending March 22nd rose to 224K, slightly below 225K estimate, signaling the continued strength of the labor market.
- Q4 2024 The final read of GDP came from an estimate of 1.9% of 2.3% to 2.3% QOQ, but the forecast is 2.4%.
- Pending home sales fell 3.6% year-on-year in February, indicating an improvement from the sharp 5.2% decline in January, suggesting a slight recovery in housing activity.
Xau/USD Technical Outlook: Gold Prices Over $3,050
Gold prices registered a new all-time high (ATH) of $3,059 as Trump provided the much-anticipated catalyst before PCE inflation counts were released on Friday. Once the yellow metal reaches a new milestone, we see that the buyer is stepping in and go back to the table for a $3,100 test.
Relative Strength Index (RSI) suggests that buyers collect steam with the index purchased. Nevertheless, traders should note that in offensive moves, the most extreme level is 80.
The next resistance for Xau/USD is $3,059. The latter violation results in a $3,100 exposure. Conversely, Gold's initial support is $3,050. Once the clear is cleared, the next stop will be $3,000, with a swing high of $2,956 on February 24th followed by a $2,900 mark and a 50-day simple moving average (SMA) of $2,887.
FAD FAQ
US monetary policy is shaped by the Federal Reserve System. The Fed has two missions. To achieve price stability and promote full employment. The main tool to achieve these goals is adjusting interest rates. When prices rise rapidly and exceed the Fed's 2% target, interest rates rise and borrowing costs for the entire economy. This makes the US dollar (USD) stronger as the US is becoming a more attractive place. If inflation rates fall below 2% or unemployment rates are too high, the Fed may lower interest rates and encourage borrowing.
The Federal Reserve holds eight policy meetings per year, where the Federal Open Market Committee (FOMC) assesses the economic situation and makes monetary policy decisions. The FOMC will feature 12 federal officials – seven members of the Governor's Committee, the chairman of the Federal Reserve Bank of New York, and four of the remaining 11 Regional Reserve Bank presidents, serve a one-year term on a revolving basis.
In extreme circumstances, the Federal Reserve can rely on a policy called Quantitative Liberty (QE). QE is a process that dramatically increases the credit flow in the financial system where the Fed has been stuck. This is a non-standard policy measure used during a crisis or when inflation is very low. This was the weapon chosen by the Fed during the 2008 big money crisis. This includes the Fed printing more dollars and using them to purchase high-quality bonds from financial institutions. QE usually weakens the US dollar.
Quantitative tightening (QT) is the reverse process of QE, with the Federal Reserve halting the purchase of bonds from financial institutions and not reinves principal from mature bonds to buy new bonds. It is usually positive about the value of the US dollar.
