Gold Advances on Safe Haven Status and Dollar Weakness

Gold is extending gains and it is testing now the 1,330, highest since February. Silver is trading down. Palladium and platinum are consolidating levels.
Mauricio Carrillo
Gold Advances on Safe Haven Status and Dollar Weakness
Gold Advances on Safe Haven Status and Dollar Weakness

Gold is trading positive on Tuesday as investors are betting on safe assets after pieces of news that have fueled concerns about the US economy as well as speculations on an imminent rate cut by the Federal Reserve.

On the other hand, experts are watching how lawmakers could stop Trump’s idea to impose tariffs to Mexico.

Long story short, dollar weakness is the key of the day with the DXY falling for the third day in a row and currently testing the 97.00 area.

Metals roundup

XAU/USD is extending gains for the fifth day in a row with the metal testing the 1,330 area, highest level traded since February 27.

Silver is trading down on Tuesday following the big jump performed on Monday. XAG/USD tested the 14.84 level, and it failed. It is now trading back to 14.70.

Palladium is trading in consolidation mode around 1,330, almost flat on the day. The pair is moving sideways between 1,320 and 1,340.

Platinum is also consolidating levels, but this time to the upside after the rally performed on Monday. Today, XPT/USD is flat on the day as it is building support at 820.00.

An interest rate cut may be warranted soon by the Federal Reserve

St Louis Federal Reserve President James Bullard raised expectations on Monday for a rate cut soon.

According to Bullard, an interest rate cut “may be warranted soon” due to growing risks to the economic growth in the United States motivated by global trade tensions and US inflation.

Although the Federal Reserve can not answer to every change in trade tensions between the United States and other countries, developments like the unexpected announcement of new tariffs on Mexican imports have added “an environment of elevated uncertainty that could feedback to US macroeconomic performance.”

The Fed is anticipating slower growth rates and risks to the downside in the US Economy.

Dollar weakness

Speculations of a rate cut soon hare hurting the dollar. Besides, concerns about the global economy plus trade tensions with no quick resolution expected are hurting market sentiment.

That is making a cocktail that is providing gold with enough stamina to visit new highs in the last days.

As the Dollar index is trading at near 7-month lows at 97.00, gold is jumping to 3-month highs at 1,330.

Gold extends gains

XAUUSD daily chart Jue 4

The yellow metal is trading positive for the fifth consecutive day on Tuesday, but gains are limited today as it is testing the 1,330 area and it is, at the same time, consolidating gains following Monday’s rally.

Currently, XAU/USD is trading at 1,325, 0.05% positive on the day. Above the 1,330, gold will face a stiff resistance at 1,346, where the 13-month highs are located.

The market sentiment is clearly fueling gold, especially after Federal Reserve comments on a rate cut. However, any comment tempering the rate cut will undermine gold’s rally.

To the downside, 1,320 is now acting as support. Below, check 1,310 and 1,300 as levels where investors will buy the bullion.

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