Created
: 2025.04.01
2025.04.01 04:06
Gold prints another record high on Monday, surpassing the $3,100 threshold for the first time and extends its gains to an all-time high of $3,127 before retreating somewhat. Uncertainty surrounding US trade policies and the April 2 Liberation Day is lingering, with investors shifting risk-averse and flocking to the yellow metal's safe-haven appeal. At the time of writing, XAU/USD trades at $3,119, up more than 1%.
Risk appetite deteriorates as traders await the announcement of additional tariffs on Wednesday. Goldman Sachs revealed that the odds of a recession in the United States (US) rose from 20% to 35%, primarily due to business and household pessimism about the outlook, as well as Washington's tolerance of a deeper economic slowdown.
Trump's comments on Sunday on Air Force One increased the chances that tariffs could be universal, instead of the 10 or 15 revealed by US Treasury Secretary Scott Bessent. "Who told you 10 or 15? You might have heard it, but you didn't hear it from me," the President said. "You'd start with all countries. So let's see what happens."
Therefore, Bullion prices exploded, even though US Treasury bond yields had recovered some ground, particularly the coupon of the 10-year T-note. The US Dollar Index (DXY), which tracks the value of the buck against a basket of six currencies, climbs 0.24% to 104.25.
On the data front, the Chicago PMI improved, despite remaining in contractionary territory for the sixteenth straight month. Ahead this week, the US economic docket will feature the ISM Manufacturing and Services PMI, as well as Nonfarm Payrolls figures.
Gold's rally expands. The yellow metal is up 18.96% so far this year, and due to uncertainty in the financial markets, the uptrend could continue. Although the Relative Strength Index (RSI) is overbought, traders should be aware that, due to the aggressiveness of the move, the most extreme level is 80.
The XAU/USD's next resistance would be the psychological $3,150 and $3,200 on the upside. On the other hand, Bullion's first support would be $3,100. A breach of the latter will expose the March 20 high turned support at $3,057, followed by the $3,000 figure.
Gold has played a key role in human's history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn't rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country's solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Created
: 2025.04.01
Last updated
: 2025.04.01
FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.
We hope you find this article useful. Any comments or suggestions will be greatly appreciated.
We are also looking for writers with extensive experience in forex and crypto to join us.
please contact us at [email protected].
Disclaimer:
All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.
The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.
Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy