- The gold price climbs to almost $ 3,090 in Monday’s early Asian session.
- Escaling of global merchant stresses and financial uncertainties increases the safe port streams and supports the gold price.
- Dealers support the US March ISM manufacturing of PMI data, which will be later on Tuesday.
The Gold Price (XAU/USD) is gaining momentum for about $ 3,090 during the early Asian session on Monday. The noble metal maintains its upset near a record high in the midst of fear of a global trade war triggered by US President Donald Trump’s latest tariffs.
Last week, Trump announced a 25% duty on imported cars and light trucks to take effect on April 3. This measure comes on top of a flat 25% duty on steel and aluminum and Trump’s impending mutual customs notice on Wednesday. The ongoing fear related to trade war and global economic uncertainty increases the yellow metal, a traditionally safe active active.
Data released by the Bureau of Economic Analysis showed Friday that the US core consumption index (PCE) rose 0.4% mother in February compared to 0.3% in January. This number came warmer than the expectation of 0.3%. On an annual basis, core PCE jumped 2.8% in February against 2.7% in advance (revised from 2.6%).
The report suggested sticky inflation in the US economy. Nevertheless, Trump’s aggressive trade policy raises concerns that the economy may fall into stagflation or even recession. This again undermines greenback and lifts the USD-denomined raw material price.
Dealers will keep an eye on the US ISM Manufacturing Charling Managers Index (PMI) for March, which will be later on Tuesday. If the report shows a stronger than expected result, this can support the US Dollar (USD) and Caple upward for the Gold Prize.
Gold frequently asked questions
Gold has played a key role in human history as it has been used extensively as a store with value and exchange medium. Currently, apart from its brilliance and use for jewelry, the precious metal is seen largely as an active port-active, which means it is considered a good investment in turbulent times. Gold is also widely seen as a hedge against inflation and against depreciation of currencies as it does not depend on any specific issuer or government.
Central banks are the largest gold holders. In their goal of supporting their currencies in turbulent times, central banks tend to diversify their reserves and buy gold to improve the perceived strength of the economy and currency. High gold reserves can be a source of trust in a country’s solvency. Central banks added 1,136 tonnes of gold to a value of about $ 70 billion to their reserves in 2022, according to Data from World Gold Council. This is the highest annual purchase since items began. Central banks from new economies such as China, India and Turkey rapidly increase their gold reserves.
Gold has a reverse correlation with the US dollar and US Treasury, which are both large reserve and secure-port assets. When the dollar is written off, gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inverted correlated with risk assets. A rally in the stock market tends to weaken the gold price, while the sale of risky markets tends to favor precious metal.
The price can move due to a large number of factors. Geopolitical instability or fear of a deep recession can quickly make the gold price escalate due to its safe port status. As a yield asset, gold tends to rise with lower interest rates, while higher costs for money usually weigh down on the yellow metal. Still, most people 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, while a weaker dollar is likely to push the gold prices up.