Gold continues to expand the scope of the new records, as it enhances the uncertainty in the safe appeal
- The price of gold continues to attract safe flows amid increasing commercial tensions.
- Instead of bets that cut the federal reserve rate a modest force for the US dollar and support the Xau/USD pair.
- Traders are now looking at the PCE price index in the United States for some meaningful motivation.
The price of gold (Xau/USD) depends on its upward momentum for the second day in a row and climbs to a new peak at all, about 3,080 dollars heading to the European session on Friday. Against the background of US car tariff Donald Trump announced on Wednesday, uncertainty about imminent mutual definitions next week and its impact on the global economy is still suffering from the feelings of investors. This is evident from a general weaker tone around the stock markets and is seen as a major factor that leads the safe flow towards the previous metal.
Regardless of this, the expectations that Trump’s aggressive commercial policies will stabilize the growth of the United States and forced the Federal Reserve (Fed) to resume its price cutting course soon provides additional support for the price of unacceptable gold. Supporting factors, to a greater extent, compensate for a modest USD increase (USD), which tends to undermine the demand for the fried commodity in US dollar. However, the bulls can stop stopping the PC PST index (PCE), which can provide signals on the course of the FBI rate and affect the unsuccessful yellow metal.
Daily Digest Market Movers: Bulls Gold PRICE retains control amid a journey driven by customs tariffs to safety
- US President Donald Trump announced on Wednesday a 25 % tariff for imported cars and light trucks that are scheduled to enter April 3, which expands the global trade war and the delicious delicious investors of the most dangerous assets.
- This comes at the top of a 25 % flat tariff on steel and aluminum, and Trump’s imminent mutual announcement next week, which nourishes uncertainty and raises the price of safe gold to a new record.
- Meanwhile, the markets are now pricing that the Federal Reserve (FED) will reduce the costs to borrow again at the June Policy meeting amid concerns about the American economic slowdown based on customs tariffs.
- It seems that the US dollar bulls are not affected by better American Macro data than Thursday, most of which are noisy comments from federal reserve officials, providing additional support to the Xau/USD husband.
- The US Economic Analysis Office (Bea) reported that the total local products (GDP) grew by 2.4 % of the annual pace in the fourth quarter, higher than the previous appreciation and expected reading by 2.3 %.
- In addition, the US Department of Labor said that the number of American citizens who submit new requests for unemployment insurance decreased to 224 thousand compared to the previous week’s solutions of 225,000.
- Richmond Reserve President Tom Parkin said that moderately restricted monetary policy is suitable for an environment with an abnormal amount of uncertainty and rapid changes in US government policy.
- In addition, Boston Susan Collins President Susan Collins warned that the Trump administration’s aggressive trade policies will increase inflation, but it is not clear how stable this upward pressure.
- Consequently, the focus remains attached to the issuance of the PC PST index (PCE), or the preferred inflation scale of the Federal Reserve, scheduled later during the early North American session.
- Investors will examine the decisive data to measure the path for further reductions in prices, which will affect the dynamics of the US dollar price and provide a new impetus for unrestricted yellow metals.
The price of gold at the height of RSI deserves to be careful before locating any other gains
From a technical perspective, the summer flexibility of this week indicates near the $ 3,000 psychological brand and the subsequent movement that the less resistant path of the price of gold remains to the upward trend. However, the RSI indicator on the daily chart is already flashing excessive conditions at the peak of purchase and asking for some caution. Consequently, it would be wise to wait for some monotheism in the short term or a modest decline before locating to extend the firmly upscale trend that he witnessed during the past three months or so.
Meanwhile, it seems that any corrective chip now attracts some purchases near the horizontal area ranging between 3,050 and 3,048 dollars. This would help reduce the downside of the gold price near the 3,036-3,035 dollars. However, the ongoing rest to the latter may lead to some technical sale and Xau/USD with no medium support to 3,020-3,019 dollars, again towards a sign of $ 3000. The aforementioned handle should serve as a main pivotal point for traders in the short term, which if broken decisively, the path should be paved for some meaningful decline in the short term.
Common questions about inflation
Inflation measures an increase in the price of a representative basket for goods and services. The main inflation is usually expressed as a change in percentage on a month on a monthly (illiterate) basis on an annual (annual) basis. Basic inflation excludes more volatile elements such as food and fuel that can fluctuate due to geopolitical and seasonal factors. The basic inflation is the number that economists focus on and is the level targeted by central banks, which are assigned to maintaining inflation at a controlled level, and is usually about 2 %.
Consumer price index (CPI) measures changing commodity and services basket prices over a period of time. It is usually expressed as changing a percentage on a month basis on a monthly (illiterate) basis and on an annual basis (YOY). Core CPI is the number targeted by central banks as it excludes food and flying fuel inputs. When the basic consumer price index rises above 2 %, it usually leads to high interest rates and vice versa when less than 2 % is less than 2 %. Since high interest rates are positive for the currency, high inflation usually leads to a stronger currency. The opposite is true when the inflation falls.
Although it may seem intuitive, high inflation in a country pays the value of its currency and vice versa to reduce inflation. This is because the central bank usually raises interest rates to combat higher inflation, which attracts more global capital flows from investors looking for a profitable place to enter their money.
In the past, gold was the asset investors turned in times of high inflation because it maintained its value, and while investors will often buy gold for its safe properties in times of extremist turmoil in the market, this is not the case most of the time. This is because when inflation is high, central banks will put interest rates to combat them. The highest interest rates are negative for gold because it increases the costs of maintaining gold in assets that bear interest or placing money in the calculation of cash deposits. On the other hand, low inflation tends to be positive for gold because it leads to low interest rates, making the bright metal a more applicable investment alternative.
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