- Gold decreases on the next day, when it attracts to safe, despite that Powell emphasizes that disadvantage has increased.
- Powell States Fed can delay the measures for clarity, note that tariffs can prolong inflation, nervous gold bulls.
- Hawkish Fed Tone increases DXY by 0.47% to 102.56; Deepening of yield curve inversion Stokes recession concerns.
Gold Prices extend their decline for the second day in a row and hit the seven -day minimum $ 3,023 per troy ounce, by more than 2.80% as chairman of the federal reserve Jerome Powell He turned at the Virginia conference.
Xau/USD drops to $ 3,023, as warns Fed chairs, inflation controlled by tariff could persist and hope for a short -term rate reduction
Powell said that monetary policy is well placed to wait for clarity before weighing monetary policy adjustments, adding that “tariffs are likely to increase inflation in the upcoming neighborhoods;
He added that long -term inflation measures are “well anchored” and that the US Central Bank’s commitment must be sure that “one -off increase in price levels will not become a permanent inflation problem”.
As for the economy, he added that the outlook is very uncertain and that despite the fact that the economy is in a good place, the risk of disadvantages increased.
When Powell answers questions, gold prices have extended their losses. It should be noted that Greenback is offered, while the US dollar index (DXY) rises by 0.47% to 102.56.
Mountain market traders appreciated more than 1% of the release of the Fed by 2025. It is because of the pessimistic scenario about economic outlook. Investors started the recession prize because the American ten-year-old yield curve deepened its inversion, the second was 25 basis points more than ten-year T-Note.
Reaction of gold price
Gold At the time of writing, they vomit them because the sellers continued to push the lower prices, with which they looked at the call of $ 3,000. If it is cleaned, it will put it into the game 50 -day simple moving average (SMA) to $ 2,937, followed by $ 2,900. On the other hand, if Xau/USD is played, the buyer must get back $ 3,100 if they want to regain the Contra.
Gold inquiries
Gold has played a key role in human history, because it is widely used as a repository of the value and medium of exchange. At present, in addition to its gloss and the use of jewelry, expensive metal is perceived as a safe asset, which means that it is considered a good investment in turbulent times. Gold is also widely considered to be a hedge against inflation and against depreciation of currencies, because it does not rely on any particular issuer or government.
Central banks are the largest gold holders. In their destination to support their currencies in turbulent times, central banks tend to diversify their reserves and buy gold to improve the perceived power of the economy and currency. High gold reserves can be a source of trust for the solvency of the country. According to the Gold World Council, central banks have added 1,136 tons of gold worth approximately $ 70 billion to their reserves in 2022. This is the highest annual purchase from the start of the records. Central banks from emerging economies such as China, India and Turkey are rapidly increasing their gold reserves.
Gold has inverse correlation with the US dollar and American cash registers, which are the main reserve and safe assets. When the dollar is depreciated, gold tends to rise and allow investors and central banks to diversify their assets in turbulent times. Gold is also indirectly correlated with risk assets. The assembly on the stock market tends to weaken the price of gold, while sales on more risky markets tend to prefer expensive metal.
The price can be due to a wide range of factors. Geopolitical instability or concerns about a deep recession can quickly escalate the price of gold thanks to their safe condition. As an asset without yield, gold tends to rise with lower interest rates, while higher money costs usually weigh on yellow metal. However, most movements still depend on how the US dollar (USD) behaves because the asset is valued in dollars (Xau/USD). The strong dollar tends to maintain the price of controlled gold, while the weaker dollar is likely to raise gold prices.
