- Gold price gains positive traction for the third straight day and climbs to a two-week high.
- Trade war fears, Fed rate cut bets, and a bearish USD continue to boost the precious metal.
- Traders now look forward to the release of the US PPI report for additional impetus.
Gold price (XAU/USD) attracts buyers for the third successive day and climbs to the $2,947 region during the Asian session on Thursday, back closer to the all-time peak touched on February 24. The positive move is sponsored by the growing market worries about the potential economic fallout from US President Donald Trump’s trade tariffs, which continues to act as a tailwind for the safe-haven bullion.
Apart from this, bets that the Federal Reserve (Fed) will cut interest rates several times this year amid signs of a cooling labor market and easing inflationary pressure turn out to be another factor that benefits the non-yielding Gold price. Meanwhile, dovish Fed expectations keep the US Dollar (USD) depressed near a multi-month low, which lends additional to the commodity and remains supportive of the move up.
Daily Digest Market Movers: Gold price continues to benefit from rising trade tensions, Fed rate cut bets
- The uncertainty surrounding US President Donald Trump’s aggressive trade tariffs fuels concerns about the potential economic slowdown and continues to push investors toward traditional safe-haven assets.
- Trump’s 25% tariff on all steel and aluminum imports took effect on Wednesday. Moreover, Trump threatened that he would respond to any countermeasures announced by the European Union and Canada.
- The European Commission on Wednesday said that the EU will impose tariffs on $28 billion worth of US goods from next month, while Canada announced 25% tariffs on more than $20 billion worth of US goods.
- Adding to this, a cooler US inflation report released on Wednesday lifted market bets for three 25-basis-point rate cuts each by the Federal Reserve at the June, July, and October monetary policy meetings.
- A report published by the US Bureau of Labor Statistics (BLS) showed that the headline Consumer Price Index (CPI) eased more than expected, to the 2.8% YoY rate in February from 3% in the previous month.
- Adding to this, the core gauge, which excludes volatile food and energy prices, rose 3.1% on a yearly basis during the reported month, marking a slowdown from the 3.3% increase registered in January.
- The US Dollar Index, which measures the Greenback against a basket of currencies, languishes near its lowest level since October 16, pushing the Gold price higher for the third straight day on Thursday.
- Traders now look forward to the US economic docket, featuring the release of the Producer Price Index (PPI), for a fresh impetus and to grab short-term opportunities later during the North American session.
Gold price seems poised to appreciate further; Wednesday’s breakout above the $2,928-2,930 barrier in play
From a technical perspective, the overnight sustained move beyond the $2,928-2,930 horizontal barrier supports prospects for a move towards challenging the all-time peak, around the $2,956 area touched on February 24. Given that oscillators on the daily chart are holding comfortably in positive territory and are still away from being in the overbought zone, some follow-through buying will be seen as a fresh trigger for bulls. This, in turn, will set the stage for an extension of the recent well-established uptrend witnessed over the past three months or so.
On the flip side, the $2,930-2,828 resistance breakpoint now seems to protect the immediate downside, below which the Gold price could accelerate the slide back towards the $2,912-2,910 intermediate support en route to the $2,900 round figure. This is followed by the weekly low, around the $2,800 region. This is followed by the $2,860 zone, which if broken decisively could pave the way for deeper losses. The XAU/USD pair might then slide towards the late February swing low, around the $2,833-2,832 region, before eventually dropping to the $2,800 mark.
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