Gold builds on strong intraday gains; bulls retain control near $3,050 area amid risk-off mood – Crypto News – Crypto News
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Gold struggles to capitalize on intraday recovery from multi-week low; remains below $3,050 Gold struggles to capitalize on intraday recovery from multi-week low; remains below $3,050

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Gold builds on strong intraday gains; bulls retain control near $3,050 area amid risk-off mood – Crypto News

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7 months ago

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  • Gold price catches fresh bids on rising global trade tensions and recession fears.
  • Bets for multiple Fed rate cuts weigh on the USD and support the precious metal.
  • Rising US bond yields could act as a headwind ahead of FOMC meeting minutes.

Gold price (XAU/USD) climbs back closer to the $3,050 area during the early European session on Thursday as worries that an all-out global trade war would push the world economy into recession continue to boost safe-haven demand. Furthermore, bets that a tariffs-driven US economic slowdown might force the Federal Reserve (Fed) to resume its rate-cutting cycle turn out to be another factor that contributes to driving flows towards the non-yielding yellow metal.

Meanwhile, the US Dollar (USD) selling remains unabated for the second straight day amid the prospects for multiple rate cuts by the Fed in 2025 and further benefits the Gold price. The strong intraday move up could further be attributed to some technical buying beyond the $3,022-3,023 hurdle. This, along with the fundamental backdrop, suggests that the path of least resistance for the XAU/USD pair is to the upside as traders look to FOMC minutes for a fresh impetus.

Daily Digest Market Movers: Gold price continues to attract safe-haven flows amid US tariffs impact worries

  • The White House press secretary Karoline Leavitt confirmed that the US will proceed with a sweeping 104% tariff on Chinese imports starting this Wednesday. This continues to fuel worries that an all-out trade war would push the global economy into recession, which triggers a fresh wave of the risk-aversion trade and revives demand for the safe-haven Gold price.
  • Investors ramped up their bets that a tariffs-driven US economic slowdown could force the Federal Reserve (Fed) to resume its rate-cutting cycle soon. In fact, the CME Group’s FedWatch Tool suggests that traders are pricing in over a 60% chance that the Fed will lower borrowing costs in May. Moreover, the US central bank is expected to deliver five rate cuts in 2025.
  • This, in turn, drags the US Dollar lower for the second straight day despite the overnight hawkish comments from Fed officials. In fact, San Francisco Fed President Mary Daly said on Tuesday that the policy is in a very good place and modestly restrictive. Daly further noted that inflation pressure from widespread tariffs is an increasing concern.
  • Separately, Chicago Fed President Austan Goolsbee said that US tariffs are way bigger than anticipated and pose a real risk to US importers who have very few fallback options. The relationship of sentiment to spending isn’t as strong as before and It’s not obvious how the Fed would react to negative supply shock, Goolsbee added further.
  • Investors now look forward to the release of minutes from the Fed’s last policy meeting. Apart from this, the US Consumer Price Index (CPI) and the Producer Price Index (PPI) on Thursday and Friday, respectively, will be scrutinized for cues about the Fed’s policy path. This, in turn, will drive the USD in the near term and influence the XAU/USD pair.

Gold price could extend the positive momentum; intraday break above the $3,022-3,023 hurdle in play

From a technical perspective, the recent sharp decline from the record high stalled near the 61.8% Fibonacci retracement level of the February-April move-up. The said support is pegged near the $2,957-2,956 area, or a multi-week low touched on Monday and is closely followed by the 50-day SMA, currently around the $2,952 region. A convincing break below the latter will be seen as a fresh trigger for bearish traders and drag the Gold price to the next relevant support near the $2,920 horizontal zone en route to the $2,900 round figure.

On the flip side, momentum beyond the overnight swing high, around the $3,023 area, could push the Gold price to the $3,055-3,056 barrier. Some follow-through buying should pave the way for a move towards reclaiming the $3,100 mark, with some intermediate hurdle near the $3,075-3.080 region.

Risk sentiment FAQs

In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.

Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.

The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.

The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.

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