- The price of gold falls to $ 3,335 during Tuesday's early session.
- Better optimism for the US-China trade agreement will damage the gold price.
- Fed Creit Cutten Bist can help limit the losses of XAU/USD.
Gold Price (XAU/USD) will lose land on Tuesday during an early Asian session to about $ 3,335. The edges of the yellow metal are lower in the midst of a modest setback of the US dollar (USD) and softening the tension between the United States and China.
On Friday, China released some of the US imports from its 125% tariff, giving hope that the US and China trade war is coming to an end, although China quickly created US President Donald Trump's claim that negotiations between the two countries were underway.
US Treasury Secretary Scott Bessent said on Monday that the US government is in contact with China, but Beijing's task is to take the first step in escalating the tariff fighting with the US because of the imbalance of the two countries. Relieving tensions between the two largest economic trade in the world reduces the demand for traditional safety regime assets such as gold. In addition, a stronger green setback added a headwind for the precious metal.
“Last week's White House comments have encouraged the optimism that US-China's trade transaction can arise, which has caused safe demand for assets such as gold,” said Tim Waterher, KCM trade market analyst.
On the other hand, the expectations that the Federal Reserve (Fed) will continue to cut its interest rates at the June meeting at the June meeting, increasing the gold price. Meanwhile, in the Fed Motor Exhibition Mode, the meeting of its federal Open Market Committee (FOMC) will remain on 7 May.
Traders will keep an eye on the initial report of the US Q1 GDP and the employment data of the US this week, as this may provide tips on Fed's next political decisions and US economic prospects. The April expectation is that the US economy will add 135,000 jobs and the unemployment rate will remain 4.2%. If the reports show a weaker result than expected, it can drag Greenback lower and increase the raw price of the arrested USD in the near future.
Golden FAQs
Gold has played a key role in the history of a person because it has been widely used as a value and medium. Nowadays, in addition to the use of shine and jewelry, precious metal is considered to be a widely used asset, which means that it is considered a good investment in turbulent times. Gold is also widely considered to be a risk against inflation and depreciated currencies as it does not depend on any particular issuer or government.
Central banks are the largest gold owners. For their own purpose, to support their currencies in a stormy time, central banks tend to diversify their stocks and buy gold to improve the perceptible strength of the economy and currency. High golden reserves may be a source of trust in the country's insolvency. According to the World Gold Council, central banks added $ 1,70 billion to $ 1,136 tonnes of gold in their stocks in 2022. This is the highest annual sequence after the record. Central banks from such an evolving economy, such as China, India and Turkey, rapidly increase their gold supplies.
Gold has an inverse correlation with the US Dollar and the US Treasury, which are the main assets of both reserve and safe assets. When the dollar is depreciated, gold tends to rise, allowing investors and central banks to diversify their property in turbulent times. Contrary to correlation with risk assets, gold is also gold. The demonstration in the stock market tends to weaken the price of gold, while precious metal is sold in more risky markets.
The price can move due to a variety of factors. Geopolitical instability or fear of a deep recession may quickly escalate the gold price due to its safe impairment. As an asset without yield, gold tends to rise at lower interest rates, while higher money costs usually weigh yellow metal. However, most moves depend on how the US dollar (USD) behaves when assets are valued (XAU/USD). A strong dollar tends to keep the gold controlled price, while a weaker dollar is likely to push gold prices.
