- The price of gold rises more than 1% on Monday while markets begin the week softly, with the decision on the interest rate of the Fed in sight.
- The geopolitical risks derived from Trump and Israel are promoting investors to return to gold.
- The upward risks persist even when the feeling seems to bow down.
The gold (Xau/USD) rises more than 1% on Monday while operators flee to safe assets after an agitated weekend on the Geopolitical Front. The Hutí attack that hit the Ben Gurion airport this weekend and Israel’s promise to retaliate while preparing for a wide land offensive in Gaza are raising the risks in the region again. Meanwhile, US President Donald Trump said military action could be an option to consider that the US takes control of Greenland.
The attractiveness of gold increases as operators prepare for the Federal Reserve Rate decision on May 7. During the weekend, Trump again expressed his dislike for the Fed and its president, Jerome Powell. After calling Powell “Rigido”, the US president urged the members of the Federal Open Market Committee (FOMC) to press President Powell to make feats of fees.
According to the Fedwatch tool of the Chicago Stock Exchange (CME), no feat cut for this Wednesday is expected. Given the recent report of non -agricultural payroll and the last series of data from sectors such as manufacturing and services, the US economy is beginning to soften, but is not collapsing. This could be ammunition so that the president of the FED, Powell, opposes political pressure and communicates to markets that rates will remain stable for longer until the Fed is comfortable enough to lower them ..
What moves the market today: closed on Monday
- Several Asian markets are closed for a holiday on Monday. The United Kingdom is also closed.
- In the gold mining sector, some acquisition news with Gold Road Resources agreed to be bought for 3.7 billion dollars after the South African suitor Gold Fields improved its offer, concluding a public dispute between the partners of the joint company, Financial Review reports.
- The CME Fedwatch tool shows that the probability of an interest rate cut by the Federal Reserve at the May meeting is 5.2% compared to a 94.6% probability that there are no changes. The June meeting presents a 46.6% probability of a rate cut.
Technical analysis of gold price: promises fulfilled
The ingot is quickly rising on Monday, while the US dollar falls at the beginning of the trading day. The synergy of the communicating vessels between the two assets arrives just a few days before the Fed Tasas decision. Contract and trigger stagnation or recession, and gold is a better positioned coverage to support that scenario.
Upwards, R1 resistance at $ 3,265 has already been overcome in a rise test at the beginning of the day on Monday. If there is a follow -up, the R2 at 3,337 $ could be a bit far. Rather, look for $ 3,290 (Maximum of May 1) and $ 3,320 (maximum of April 30) as nearby intermediate levels for rising resistance.
On the negative side, the pivot at $ 3,244 together with the technical level at $ 3,245 should work and maintain. In the event that the ingot drops more, there are very close supports about $ 3,219 (Intradía S1) and $ 3,197 (Intradía S2 support) for Monday.
Xau/USD: Daily graphic
Oro FAQs
Gold has played a fundamental role in the history of mankind, since it has been widely used as a deposit of value and a half of exchange. At present, apart from its brightness and use for jewelry, precious metal is considered an active refuge, which means that it is considered a good investment in turbulent times. Gold is also considered a coverage against inflation and depreciation of currencies, since it does not depend on any specific issuer or government.
Central banks are the greatest gold holders. In their objective of supporting their currencies in turbulent times, central banks tend to diversify their reserves and buy gold to improve the perception of strength of the economy and currency. High gold reserves can be a source of trust for the solvency of a country. Central banks added 1,136 tons of gold worth 70,000 million to their reservations in 2022, according to data from the World Gold Council. It is the largest annual purchase since there are records. The central banks of emerging economies such as China, India and Türkiye are rapidly increasing their gold reserves.
Gold has a reverse correlation with the US dollar and US Treasury bonds, which are the main reserve and shelter assets. When the dollar depreciates, the price of gold tends to rise, which allows investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rebound in the stock market tends to weaken the price of gold, while mass sales in higher risk markets tend to favor precious metal.
The price of gold can move due to a wide range of factors. Geopolitical instability or fear of a deep recession can cause the price of gold to rise rapidly due to its condition of active refuge. As an asset without yield, the price of gold tends to rise when interest rates lower, while the money increases to the yellow metal. Even so, most movements depend on how the US dollar (USD) behaves, since the asset is quoted in dollars (Xau/USD). A strong dollar tends to keep the price of gold controlled, while a weakest dollar probably thrusts gold prices.
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