Gold price (XAU/USD) hovers near a two-month high around $2,085 in Monday’s European session. The precious metal clings to gains amid increasing expectations of an interest-rate cut by the Federal Reserve (Fed) in its June monetary policy meeting.
However, the uncertainty over rate cut expectations could rebound this week as Fed Chair Jerome Powell is set to comment on inflation, interest rates, and the economy in his testimony before Congress.
Jerome Powell is expected to remain hawkish as Fed policymakers want to see inflation easing for months before changing their monetary policy stance. Strong labor market conditions allow them to patiently observe inflationary pressures and cut interest rates only after there is convincing evidence that inflation will decline to the desired target of 2%.
Apart from Fed Powell’s commentary, economic data such as the United States’ Institute of Supply Management (ISM) Services PMI, JOLTS Job Openings, and Nonfarm Payrolls data will remain in the spotlight.
Meanwhile, the US Dollar Index (DXY), which measures Greenback’s value against six major currencies, drops to 103.80, as the Manufacturing PMI surprisingly fell by 1.3 points to 47.8 from 49.1 in January. Investors had projected an increase to 49.5. The New Orders Index for the manufacturing sector fell back into contraction territory at 49.2 from 52.5 in January.
Gold price rallies after an upside break of the Symmetrical Triangle pattern formed on a daily timeframe. The breakout of the aforementioned chart pattern exhibits a volatility expansion, which leads to wider ticks on the upside and heavy volume. The precious metal could extend its upside towards the horizontal resistance plotted from the December 4 high at $2,144.48.
The upward-sloping 20-day Exponential Moving Average (EMA) is at $2,040, indicating strong demand in the near term.
The 14-period Relative Strength Index (RSI) climbs above 60.00, indicating a bullish momentum ahead amid the absence of divergence and oversold signals.
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
© 2000-2024. Уcі права захищені.
Cайт знаходитьcя під керуванням TeleTrade DJ. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
Інформація, предcтавлена на cайті, не є підcтавою для прийняття інвеcтиційних рішень і надана виключно для ознайомлення.
Компанія не обcлуговує та не надає cервіc клієнтам, які є резидентами US, Канади, Ірану, Ємену та країн, внеcених до чорного cпиcку FATF.
Проведення торгових операцій на фінанcових ринках з маржинальними фінанcовими інcтрументами відкриває широкі можливоcті і дає змогу інвеcторам, готовим піти на ризик, отримувати виcокий прибуток. Але водночаc воно неcе потенційно виcокий рівень ризику отримання збитків. Тому перед початком торгівлі cлід відповідально підійти до вирішення питання щодо вибору інвеcтиційної cтратегії з урахуванням наявних реcурcів.
Викориcтання інформації: при повному або чаcтковому викориcтанні матеріалів cайту поcилання на TeleTrade як джерело інформації є обов'язковим. Викориcтання матеріалів в інтернеті має cупроводжуватиcь гіперпоcиланням на cайт teletrade.org. Автоматичний імпорт матеріалів та інформації із cайту заборонено.
З уcіх питань звертайтеcь за адреcою pr@teletrade.global.