Gold holds above $2,900 mark; lacks bullish conviction amid positive risk tone – Crypto News – Crypto News
Connect with us
Gold price in Saudi Arabia: Rates on February 25 Gold price in Saudi Arabia: Rates on February 25

others

Gold holds above $2,900 mark; lacks bullish conviction amid positive risk tone – Crypto News

Published

11 months ago

on

  • Gold price holds steady near a one-week high, and lacks bullish conviction.
  • Trade war fears, Fed rate cut bets, and a bearish USD support the XAU/USD pair.
  • A positive risk tone caps the commodity ahead of the US NFP report on Friday.

Gold price (XAU/USD) struggles for a firm direction during the Asian session and extends its sideways consolidative price move for the second straight day on Thursday. Concerns about US President Donald Trump’s tariff measures continue to act as a tailwind for the safe-haven bullion. Apart from this, the bearish sentiment surrounding the US Dollar (USD) and rising bets for an earlier-than-expected interest rate cut by the Federal Reserve (Fed) turn out to be other factors underpinning the non-yielding yellow metal.

However, a generally positive tone around the equity markets holds back bulls from placing fresh bets around the Gold price. Investors also seem reluctant and opt to wait for the US monthly employment details, or the Nonfarm Payrolls (NFP) report, on Friday. In the meantime, the usual Weekly Initial Jobless Claims from the US might provide some impetus later during the North American session. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the XAU/USD pair remains to the upside. 

Daily Digest Market Movers: Gold price traders remain on the sidelines ahead of US NFP report on Friday

  • US President Donald Trump’s new 25% tariffs on most imports from Mexico and Canada took effect on Tuesday, along with the doubling of duties on Chinese goods to 20%. 
  • Canada announced retaliatory tariffs against more than $100 billion worth of US products, while China slapped tariffs of up to 15% on various US agricultural exports.
  • In his first address to the US Congress, Trump said that further tariffs, including “reciprocal tariffs” would follow on April 2, raising the risk of an all-out trade war.
  • Investors remain worried that Trump’s tariffs could slow the US economic growth and force the Federal Reserve to cut interest rates multiple times by the end of this year. 
  • The bets were lifted by the Automatic Data Processing (ADP) report, which showed that US private sector employment grew by just 77K in February, vs 140K expected.
  • Meanwhile, the economic activity in the US service sector continued to expand at an accelerating pace in February, though it did little to inspire the US Dollar bulls. 
  • The USD Index (DXY) drops to its lowest level since December 2024 and further acts as a tailwind for the Gold price during the Asian session on Thursday. 
  • The White House announced a one-month delay for US automakers to comply with the US–Mexico–Canada Agreement regarding the tariffs imposed on Mexico and Canada. 
  • This, in turn, boosts investors’ appetite for riskier assets, which is holding back traders from placing aggressive bullish bets around the safe-haven XAU/USD pair. 
  • Investors now look to the usual Weekly Initial Jobless Claims data from the US for some impetus, though the focus remains on the US Nonfarm Payrolls on Friday. 

Gold price remains below the $2,934 pivotal resistance; bullish potential seems intact

From a technical perspective, momentum beyond the $2,934 immediate hurdle has the potential to lift the Gold price back towards the all-time peak, around the $2,956 area touched in February. Some follow-through buying would be seen as a fresh trigger for bullish traders and pave the way for an extension of a multi-month-old uptrend witnessed amid positive oscillators on the daily chart. 

Meanwhile, the lack of follow-through buying warrants some caution before positioning for any further gains. That said, any corrective slide might still be seen as a buying opportunity near the $2,900 mark and remain limited. Some follow-through selling, however, could pave the way for deeper losses towards the $2,884-2,883 intermediate support en route to the $2,860-2,858 horizontal support.

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.

 

Related Topics:
Continue Reading

Trending