Gold rises on Geopolitical risk and Chinese trade data improves.
Gold comes back from resistance and resumes trading inside a growing range.
The gold price (XAUUSD) is trading Marginally higher on Thursday, Exchanging hands in the $2,310s at the time of writing. Following better than expected trade data from China. A major gold market, and the release of a report by the World Gold Council (WGC) Highlighting continued demand from central banks and Asian buyers.
A Standstill in ceasefire talks between Israel and Hamas due to Israel’s ongoing incursions into Rafah. And indications of a Worsening situation on The frontline for Ukraine adds additional upward pressure from global risk, benefiting gold as a safe haven.
Gold prices climb on China statistics and the outlook for demand.
Gold prices rose on Thursday after Chinese trade data showed a stronger than expected 1.5% year over Year. Increase in Chinese exports in April, rebounding from a 7.5% decrease the previous month. According to the report, imports increased by 8.4%, above the 5.4% projection. And the preceding 1.9% dip. China is a major player in the global gold market. Therefore positive economic data from the country influences its valuation.
Asian demand was also a factor noted by the WGC, a respected barometer of the global gold market, which published its current assessment and prediction for the future relating the gold Market in April.
According to WGC’s research, while Indian demand declined and the Gold futures market exhibited flatlining uptake, Chinese demand and US ETF flows improved, “joining strong demand for Asian ETFs.”
The significance of central banks as significant buyers was emphasized, as was geopolitical risk.
“Gold hit new all-time highs in April but pulled back by month-end: Chinese buying and central banks appear to be major drivers of support,” according to the article.
Regarding the forecast, WGC observed that “stagflation risks are on the rise: growth appears fragile while inflation remains problematic.” Asian investors may continue to attract attention.
The outlook for interest rates caps upside.
The gold price may continue to struggle to gain traction, but investors continue to predict rather significant interest. Interest rates in the United States are expected to rise in the future, making non-yielding gold less appealing.
Although last week’s US Nonfarm Payrolls statistics showed a weakness in the US job market, implying that the Federal Reserve (Fed) may cut interest rates sooner than expected, subsequent commentary from Fed members indicates a persistent reluctance to lower interest rates.
On Wednesday, Boston Fed President Susan Collins said it appeared like inflation would take “longer than previously thought” to fall, implying. That the Fed would need to keep interest rates restrictively high for longer.
Meanwhile, Minneapolis Fed President Neel Kashkari stated. That interest rates will likely have to remain at present levels for a “extended period” in order to bring inflation back down.
A market-based The CME FedWatch tool, which measures the likelihood of future interest rate decisions by the Fed. Currently puts the odds of rate cuts in September or early at 65% (down from 85% a week ago) and 78% in November. Previously, the probabilities in November were almost 100%.
