The gold price rose again Tuesday, after having fallen slightly in the prior session. This was due to uncertainty over Trump’s tariffs that will be implemented next week.
On Tuesday, the gold price also rose despite fears of a US recession.
Haresh Menghani is the editor of FXstreet. In a recent report, he said that the gold price (XAU/USD), despite modest intraday gains managed to stay above the psychological $3,000 mark during the European session.
The growing belief that the Federal Reserve will soon resume their rate-cutting cycles holds USD bulls back from making aggressive bets, and gives some support to Gold’s non-yielding price.
The most active June gold contract at COMEX is currently $3,053.91 an ounce. This represents a 0.3% increase from its previous closing price.
Silver contract most active on COMEX at $33.758 an ounce was up by 0.9% since the previous closing.
Menghani added that “the lack of further sales below $3,000 is a cautionary sign before confirming the XAU/USD tops out near-term and preparing for a continuation of recent decline from its all-time high.”
Tariffs and Interest Rates
Wall Street interpreted the announcement by US President Donald Trump on Monday, that tariffs on automobiles will be implemented but not all levies threatened would be applied on April 2, as an indication of flexibility in a subject that has been roiling markets for several weeks.
Trump’s policies on tariffs are seen by many as contributing to a slowdown in economic growth and inflation, leading to further trade tensions.
Raphael Bostic of the Atlanta Fed predicted a slower pace of inflation in the months to come and that the central bank’s benchmark rate could be cut by only one quarter percentage point.
Menghani is added to the list
While traders were concerned about the US economy, they increased their bets on the Fed’s policy-easing cycle to resume soon. This capped further USD gains, and gave support to non-yielding gold.
FXstreet says that the North American session of the FOMC could provide a boost to the demand for the US dollar, and the short-term opportunity around the XAU/USD pairing.
UBS raises gold price forecast
UBS is a global leader in financial services. It has raised its forecast for gold prices.
Bank of America now predicts the price for gold to reach $3.200 an ounce in the next four months.
The forecast was $3,000 an ounce for some time.
According to Kitco, the UBS analyst’s bullish revision was driven by the increasing probability of a long-term global trade war, which highlighted gold as a valuable store, kitco.com reported.
Views from the Technical Perspective
The XAU/USD has shown some resistance near the $3,000 level. Menghani stated that the handle would likely act as an important pivotal point. If it is broken, technical selling could occur and push the Gold price down to $2,982-2978.
Gold’s corrective drop may extend towards the resistance breakpoint at 2,956-2,954 which was previously a level of support.
The overnight swing-high of $3.033, which reached its all-time peak last week, is the next immediate level of resistance.
Menghani said that “given the oscillators are comfortably holding in the positive zone on the daily chart, some further buying would be seen by bulls as a new trigger and could set up an extension to a long-standing upward trend.”
What’s Next? This post may change as new information becomes available
