Gold prices are getting higher amid the US-China trade war
Although some banks in Europe closed yesterday to celebrate Easter, it seems that this did not stop the increase in gold prices. Gold again formed a new all-time high at 3430 after successfully breaking the prior ATH of 3357. The gold price drew a long bullish body candle with almost no shadow on the top and bottom of the candle. The gold price formed a high of 3430 low of 3328, closing at 3423.
Will gold soon reach 3500 as some analysts hope, or are they wary of a possible reversal?
The main US-China trade war has created market uncertainty and fear of recession. Gold, as a safe-haven asset, benefits from market uncertainty. However, the gold price also fluctuates; when the price is considered overvalued, it allows some investors to release gold to take profit. This could cause a temporary reversal if the market releases large amounts of gold.
Recently, China threatened countries negotiating tariffs with the Trump administration. China said that the soft approach would ultimately fail on both sides and harm the other party. They also emphasized that negotiations conducted by several countries with the US would sacrifice the interests of that country. Furthermore, China threatened to take retaliatory action against countries that negotiate tariffs that sacrifice China's interests.
Almost all countries were imposed a base import tariff of 10% by Trump, while China imposed a base tariff of up to 145% and a reciprocal tariff of up to 245%.. China then responded with a 125% tariff on imported goods from the US.
Meanwhile, in the US, the feud between Powell and Trump has become a hot issue in the country, reflecting the political turmoil over the country's economic instability. Trump threatened to fire Powell because Trump was dissatisfied with the Fed, which was burning amid the polemic of Trump's tariff policy. Trump has repeatedly said that he wants interest rate cuts to help stimulate economic growth, along with the tariff policy he has implemented. However, the Fed has not yet cut interest rates. On the other hand, the Fed is being more cautious in its interest rate policy because the inflation target has not been achieved amidst a tariff policy that is predicted to cause an increase in inflation.
The Fed's current interest rate is 4.50%. According to the CME Group's Fedwatch tool, the Fed is expected to keep interest rates unchanged at its May 7 meeting with a probability level of 96.3%.
The dollar index (DXY), which tracks the performance of the USD against six other major currencies, is increasingly slumping to a low of 97.92 after breaking a low of 99.222. The DXY price is increasingly moving away from the EMA 20, reflecting strong bearish sentiment even though the RSI has pointed to level 23, which is the oversold zone level.
Although some banks in Europe closed yesterday to celebrate Easter, it seems that this did not stop the increase in gold prices. Gold again formed a new all-time high at 3430 after successfully breaking the prior ATH of 3357. The gold price drew a long bullish body candle with almost no shadow on the top and bottom of the candle. The gold price formed a high of 3430 low of 3328, closing at 3423.
Will gold soon reach 3500 as some analysts hope, or are they wary of a possible reversal?
The main US-China trade war has created market uncertainty and fear of recession. Gold, as a safe-haven asset, benefits from market uncertainty. However, the gold price also fluctuates; when the price is considered overvalued, it allows some investors to release gold to take profit. This could cause a temporary reversal if the market releases large amounts of gold.
Recently, China threatened countries negotiating tariffs with the Trump administration. China said that the soft approach would ultimately fail on both sides and harm the other party. They also emphasized that negotiations conducted by several countries with the US would sacrifice the interests of that country. Furthermore, China threatened to take retaliatory action against countries that negotiate tariffs that sacrifice China's interests.
Almost all countries were imposed a base import tariff of 10% by Trump, while China imposed a base tariff of up to 145% and a reciprocal tariff of up to 245%.. China then responded with a 125% tariff on imported goods from the US.
Meanwhile, in the US, the feud between Powell and Trump has become a hot issue in the country, reflecting the political turmoil over the country's economic instability. Trump threatened to fire Powell because Trump was dissatisfied with the Fed, which was burning amid the polemic of Trump's tariff policy. Trump has repeatedly said that he wants interest rate cuts to help stimulate economic growth, along with the tariff policy he has implemented. However, the Fed has not yet cut interest rates. On the other hand, the Fed is being more cautious in its interest rate policy because the inflation target has not been achieved amidst a tariff policy that is predicted to cause an increase in inflation.
The Fed's current interest rate is 4.50%. According to the CME Group's Fedwatch tool, the Fed is expected to keep interest rates unchanged at its May 7 meeting with a probability level of 96.3%.
The dollar index (DXY), which tracks the performance of the USD against six other major currencies, is increasingly slumping to a low of 97.92 after breaking a low of 99.222. The DXY price is increasingly moving away from the EMA 20, reflecting strong bearish sentiment even though the RSI has pointed to level 23, which is the oversold zone level.
I trade at FXOpen