- The price of gold sinks more than 5% after reaching a new historical maximum of 3,500 $ on Tuesday.
- The president of the USA Donald Trump hints at the reduction of tariffs for China and confirms that Jerome Powell, president of the Fed, will remain in his position.
- The markets buy the change in trend, with upward shares and bonds, while the safe refuge gold is punished.
The price of gold (Xau/USD) is directed towards $ 3,322 on Wednesday at the time of writing, on a second day of benefits. The benefit taking intensified after the comments of the president of the United States (USA) Donald Trump, who took a 180 -degree turn in his position on China and the Federal Reserve (Fed). After the closing of the stock market, the executive director of Tesla (TSLA), Elon Musk, said he will reduce his role in the government efficiency department (Doge).
President Trump rejected previous statements in which he sought to say goodbye to the president of the Fed Jerome Powell To say now that it has no intention of saying goodbye despite its frustration with the Fed for not acting faster with interest rate cuts, the Wall Street Journal reported. The president continued to say that he will be “very kind” with China in any commercial conversation and that tariffs will decrease if the two countries can reach an agreement. Final tariffs on China would not be about 145%, but much lower, he said, according to Bloomberg.
What moves the market today
- Gold has fallen in relation to Bitcoin this week, but it is expected that its long -term performance trend will be extended due to the demand of its secure refuge qualities. Investors will be waiting for more statements by US leaders, who will cloud the perspectives in the next few days, Bloomberg reports.
- The central banks will continue to buy gold in an effort to diversify from the fiduciary currencies in the middle of the current political and economic agitation, according to the billionaire manager of coverage funds John Paulson, reports Reuters.
- “Gold is tactically very overwhelmed and extended – it has risen more than $ 500 in 8 days of negotiation, so there is naturally a mixture of buyers and some risk reduction,” said Nicky Shiels, head of research and metal strategy in MKS Pamp SA, reports Bloomberg.
Technical analysis of the price of gold: will China bite the hook?
The precious metal sees its relative force index (RSI) to return to the normal negotiation range after having spent several days in the overcompra zone. An additional benefits would make sense given the softer tone of President Trump. Currently around 63, it would make sense that the RSI went back to 50 with the price of gold probably looking for support about $ 3,167, the key level of early April.
The upward daily pivot point at $ 3,415 is the first level of resistance, which is quite far and would mean that gold would completely reverse and even become positive in the day. Such movement would push the RSI back to the territory of overcompra. Above, the next resistance is at 3,464 $.
At the bottom, the first support is at $ 331, which has already broken in the first operations. At least one test is expected in the S2 in $ 3,282, which coincides with the minimum of April 17. Below, the key level of early April should also capture the attention of the operators at 3,167 $.
Xau/USD: Daily graphic
Fed FAQs
The monetary policy of the United States is directed by the Federal Reserve (FED). The Fed has two mandates: to achieve prices stability and promote full employment. Its main tool to achieve these objectives is to adjust interest rates. when prices rise too quickly and inflation exceeds the objective of 2% set by the Federal Reserve, it rises interest rates, increasing the costs of loans throughout the economy. This translates into a strengthening of the US dollar (USD), since it makes the United States a more attractive place for international investors to place their money. When inflation falls below 2% or the unemployment rate is too high, the Federal Reserve can lower interest rates to foster indebtedness, which weighs on the green ticket.
The Federal Reserve (FED) celebrates eight meetings per year, in which the Federal Open Market Committee (FOMC) evaluates the economic situation and makes monetary policy decisions. The FOMC is made up of twelve officials of the Federal Reserve: the seven members of the Council of Governors, the president of the Bank of the Federal Reserve of New York and four of the eleven presidents of the regional banks of the Reserve, who exercise their positions for a year in a rotary form.
In extreme situations, the Federal Reserve can resort to a policy called Quantitative Easing (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non -standard policy measure used during crises or when inflation is extremely low. It was the weapon chosen by the Fed during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy high quality bonds of financial institutions. The one usually weakens the US dollar.
The quantitative hardening (QT) is the inverse process to the QE, for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the bonds that it has in portfolio that they expire, to buy new bonds. It is usually positive for the value of the US dollar.
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