Is now the right time to invest in Gold? Well the last couple of days are quite interesting for the investors.
Gold prices are trending positively for the third day in a row today, trading near their highest level since November 1 last year in the first half of the European session. Uncertainty over US President Donald Trump’s trade policy has proven to be a key factor that continues to drive inflows into the precious metal. In addition, expectations that the US Federal Reserve will cut interest rates twice this year are lending additional support to the so far unyielding yellow metal.
Therefore, the positive market sentiment, together with the recovery in US Treasury yields and the slight recovery in the US dollar from a two-week low, is acting as a headwind for the price of gold. Market sentiment seems to support the prospect of a continuation of last month’s positive trend.
A few hours after taking the oath of office, US President Donald Trump said he intends to impose 25 percent tariffs on Canada and Mexico, with the target date for the tariffs being early February at the earliest.
Trump’s tariff announcements sparked concerns about a new wave of a global trade war, boosted safe-haven demand and pushed gold prices to their highest since early November.
Signs of easing U.S. inflation revived bets that the Federal Reserve might not rule out a rate cut later this year, weighing on U.S. Treasury yields.
This, along with a ceasefire agreement between Israel and Hamas and hopes that Trump could ease restrictions on Russia in return for a deal to end the war in Ukraine, continue to support risk sentiment.
The US dollar is gaining some momentum during the Asian session on Wednesday, moving away from the two-week low retested on Tuesday, which could cap gains for XAU/USD.
Investors are now eagerly awaiting the Bank of Japan’s much-anticipated decision on Friday, which could create volatility in financial markets and impact the safe-haven precious metal.
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