- The price of gold goes back below $ 3,400 in the prelude to the Fed confrontation.
- The US dollar rises for optimism about commercial conversations between the US and China.
- The price of gold seems like an operation of ‘buying in falls’ before the verdict of the Fed.
The price of gold has been under intense sales pressure early on Wednesday, correcting abruptly from the maximum of two weeks of $ 3,435. The renewed optimism about the next commercial conversations between the US and China and the benefits before the US Federal Reserve Announcements of the US (FED).
The price of gold goes back before the next great upward movement
At the last minute of Tuesday, the White House announced that US Treasury Secretary, Scott Besent, and the US trade representative (USTR), Jamieson Greer, will travel to Geneva, Switzerland, to attend commercial conversations with the viceprimer Chinese minister, He Lifeng. Commercial conversations will be held from May 9 to 12 in an effort to de -display a commercial war between the two largest economies in the world.
Asian traders arrived at their desks on Wednesday and reacted positively to this news of the night, reducing flows to safe shelters and the demand for the traditional value warehouse, the price of gold. The US dollar (USD) is strengthened with optimism about trade between the US and China relieved concerns about economic growth.
Meanwhile, traders resort to benefits after the last recovery of the price of gold, relocating before the critical verdict of the Fed and the press conference of President Jerome Powell. Since a decision of non -change of rates has been completely discounted, Powell’s tone during the press conference will be key to altering market expectations about interest -rate cuts this year.
After solid US labor market data and business PMIs, the markets have reduced bets for a rate cut in June, with Goldman Sachs and Barclays, moving their fees forecasts to July since June.
Powell will probably remain in the cautionary rhetoric of the Fed, hinting at an approach to wait and see in the absence of clarity about the impact of US tariff New dollar rise. As a result, the price of gold could extend its correction from the maximum of two weeks.
On the other hand, the price of gold could experience a new rebound if the Fed indicates a rate cut in June, expressing concerns about economic perspectives.
Meanwhile, the fall in the price of gold could continue to be cushioned by the growing geopolitical tensions globally. Israel’s security cabinet unanimously approved a plan to expand the military offensive in Gaza. Meanwhile, a Kremlin spokesman said Russia will remain in his plans to impose a unilateral fire between May 8 and 11. However, he warned that an appropriate response will be given immediately if Ukraine does not stop the fire either.
Pakistan has promised a strong retaliation after the Indian Armed Forces carried out missile attacks against nine terrorist objectives in Pakistan and in Kashmir occupied by Pakistan (Pok), in response to the terrorist attack in Pahalgam in Jammu and Kashmir.
Technical analysis of gold price: Daily graphics
The price of gold faced rejection below the channel support (now resistance), with abruptly backing towards the initial support of the psychological barrier of $ 3,350.
-The simple mobile average (SMA) of 21 days at $ 3,283 will be the following line of defense for gold buyers. Deep falls will challenge the minimum of May 2, $ 3,223.
However, the 14 -day relative force index (RSI) is maintained above the midline about 61.50, suggesting that any fall will probably be bought.
The price of gold must find a firm support above the maximum of two weeks of $ 3,435 to take upward impulse. The next upward objective is located in the channel support (now resistance) at $ 3,494, where the historical maximum will also be activated.
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.
