- The price of gold decreases to $ 3,315 during the first Asian session on Wednesday.
- The relief of trade tensions weighs on the price of gold.
- The American ADP job change, the PCE and the GDP reports of the Q1 Flash will be the strengths later on Wednesday.
The price of gold (XAU / USD) extends the decline to almost $ 3,315 during the first Asian session on Wednesday. The precious metal edges lower in the middle of trade tensions and better risk feelings in the world markets. Merchants will have an eye on the American ADP job change, the personal consumption consumption index (PCE) and the Flash Q1 interior (GDP) reports, which are later due Wednesday.
US President Donald Trump plans to soften the impact of his car rates by preventing tasks on foreign manufacturing cars to stack with other prices and soften the samples from foreign parts used in the manufacturing of cars, officials said. US Treasury Secretary Scott Bessent said on Monday that the main business partners had made “very good” offers to avoid American prices. In addition, recent measures to exempt certain American goods from reprisal prices demonstrate a desire to defuse trade tensions.
The softening of trade tensions has reduced gold demand, a traditional security asset. “Fidiness occurred in the midst of the United States's opening talks with several nations and increasing expectations of a possible China-US trade agreement according to US President Donald Trump. In addition, optimism around a possible Russia-Ukrraine peace agreement has also weighed on the demand for security and the currency for gold,” said Jateen Trivedi, Commodity and Currency, LKP Securities.
Investors are waiting for a multitude of important American economic data this week for a new momentum. The American ADP employment change, the personal consumer expenses (PCE) and the Flash Q1 Gross Domestic Product Reports will be published on Wednesday later. Friday, attention will be paid to the employment report in American April.
The wait for April is that the American economy will add 130,000 jobs and that the unemployment rate will remain at 4.2%. If the reports show a lower than expected result, this could lead to the drop in greenback and increase the price of raw materials denominated by the USD in the short term.
FAQ GOLD
Gold played a key role in the history of man because it was widely used as a reserve of value and means of exchange. Currently, apart from its shine and its use for jewelry, precious metal is largely considered as an asset in Houmle, which means that it is considered a good investment at the turbulent time. Gold is also widely considered as coverage against inflation and the depreciation of currencies because it was not based on a specific transmitter or government.
Central banks are the biggest gold holders. In their objective of supporting their currencies at the turbulent time, central banks tend to diversify their reserves and buy gold to improve the perceived force of the economy and money. High gold reserves can be a source of confidence for the solvency of a country. The central banks added 1,136 tonnes of gold worth around $ 70 billion to their reserves in 2022, according to World Gold Council data. This is the highest annual purchase since the start of the files. The central banks of emerging savings such as China, India and Turkey quickly increase their gold reserves.
Gold has an opposite correlation with the US dollar and American treasury vouchers, which are both the main security and security assets. When the dollar depreciates, gold tends to increase, allowing investors and central banks to diversify their assets on turbulent times. Gold is also inversely correlated with risk assets. A stock exchange on the stock market tends to weaken the price of gold, while sales in the risky markets tend to promote precious metal.
The price can evolve due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly degenerate gold prices because of its security status. As an without efficiency, gold tends to increase with lower interest rates, while the cost of higher silver generally weighs the yellow metal. However, most movements depend on how the US dollar (USD) behaves as the asset is assessed in dollars (XAU / USD). A strong dollar tends to maintain the price of controlled gold, while a lower dollar is likely to raise gold prices.
