- In the early Asian session on Monday, the price of gold rises to $ 3,090.
- Increased global trade tensions and economic uncertainties increase the flow of flowing flows safely by supporting the price of gold.
- Traders support the US March ISM manufacturing PMI data that will be held on Tuesday.
The price of gold (XAU/USD) gains acceleration for about $ 3,090 in the early Asian session on Monday. Dear Metal, US President Donald Trump’s latest tariffs, triggered by a global trade war in the midst of the fear of the rise trend.
Trump announced a 25% tariff for imported cars and light trucks that will enter into force on April 3 last week. This measure is a 25% flat tariff in steel and aluminum, and Trump’s announcement of mutual tariff announcement on Wednesday. The ongoing fears about trade wars and global economic uncertainty increase the yellow metal, a traditional safe asset.
Data published by the Economic Analysis Bureau on Friday showed that the US Basic Personal Consumption Expenditures (PCE) price index increased by 0.4% in February and in January compared to 0.3%. This figure was warmer than 0.3%expectation. Annually, the core PCE increased by 2.8% in February with an increase of 2.7% (revised from 2.6%).
The report proposed adhesive inflation in the US economy. However, Trump’s aggressive trade policy expresses concerns that the economy may fall into stagflation and even stagnation. This weakens Greenback and removes the commodity price in USD.
In March, traders will take care of the US name production purchasing managers Index (PMI), which will be held on Tuesday later. If the report shows a stronger result than expected, it may support the US Dollar (USD) and limit it up for the gold price.
Golden FAQ
Since gold is widely used as a means of value and change, it has played an important role in human history. Currently, in addition to its brightness and jewelry, precious metal is widely seen as a safe asset, that is, it is considered a good investment in turbulent times. Gold is also seen as a fence against currencies against inflation and depreciation because it is not based on a particular exporter or government.
Central banks are the largest gold holders. In order to support currencies in turbulent times, central banks tend to diversify and purchase gold to increase the perceived power of the economy and currency. High gold reserves can be a source of trust for a country’s payment power. According to World Gold Council data, central banks added 1,136 tons of gold worth about 70 billion dollars to their reserves in 2022. This is the highest annual purchase since the registrations started. Central banks of developing economies such as China, India and Türkiye are rapidly increasing their gold reserves.
Gold has an inverse correlation with both large reserves and safe assets, US Dollar and US treasures. The dollar tends to rise in the depreciation and allows investors and central banks to diversify their presence in turbulent times. Gold is also contrary to risk assets. While a rally on the stock market tends to weaken the gold price, sales in the risk markets tend to support valuable metal.
The price can act due to a wide range of factors. Geopolitical instability or a deep fear of stagnation can rapidly increase the price of gold due to safe protected status. As an inefficient asset, gold tends to rise with lower interest rates, while the higher cost of money usually gives weight on the yellow metal. Nevertheless, most moves depend on how the US dollar (USD) behaves as priced as dollar (XAU/USD). A strong dollar tends to control the gold price, while a weaker dollar raises gold prices.
